LNG Prices in Asia Set to Rise as Russian Gas Flow Through Ukraine Ends

The cessation of Russian natural gas flow to Europe via Ukraine is expected to drive up LNG prices in Asia. Expectations of halted Russian gas supplies have increased the price of natural gas contracts in Europe for 2024 by more than 50%. These price hikes have not yet fully reflected the costs of typically more expensive LNG, which countries such as Japan and South Korea heavily rely on.

Ukrainian President Volodymyr Zelensky stated via Telegram that he hopes the increased gas supply from the U.S. and other producers to Europe will ease prices. Russia's invasion of its neighbor in February 2022 sparked an energy crisis in Europe, resulting in a spike in regional benchmarks and international liquefied natural gas prices.

This situation will further tighten the LNG market. Scott Darling, the general manager at Haitong International Securities, stated on Bloomberg TV on Thursday, "We think the market will be tight this year and probably next year. LNG supply is particularly constrained, and we see more upward risk for spot LNG prices this year and next year."