LNG shipping costs have surged to the highest in eight months as shipowners assess Middle East risks and hold off chartering vessels, reducing available ships, while price signals in Asia are favoring cargoes going to the Pacific market.
Both the Atlantic and Pacific freight rates jumped on Monday to their highest levels since October 2024, but the Atlantic shipping rates were much higher, according to data from Spark Commodities cited by Reuters.
Spark Commodities assessed that the daily rate for chartering the most common type of LNG carrier in the Atlantic was $51,750 per day on Monday. That was the highest level since October 3, 2024. The Pacific rate also jumped to the highest since October, to $36,750 per day.
At the end of last week, the Atlantic freight rate rallied towards $50,000 per day, the highest this year, as the U.S. arbitrage to Asia is nearing breakeven levels—the arbitrage window for U.S. cargoes to Asia begins to open, Spark Commodities said.
Open U.S. arbitrage to northeast Asia encourages shipments from the U.S. LNG export facilities to Asian customers, instead of to Europe. This in turn raises freight demand and lifts freight rates, according to Spark Commodities.
“Recently, rising JKM premiums over TTF in response to the escalating events in the Middle East have pushed US breakevens rapidly higher, and freight rates have rallied alongside this move,” the commodities pricing analysts said, referring to higher Asian LNG prices compared to the European benchmark.
“This rise in global LNG freight rates has been largely due to tight vessel availability, which in turn has been caused by a shift in pricing signals for U.S. cargoes,” Qasim Afghan, an analyst with Spark Commodities, told Reuters.
The rise has been additionally fueled by concerns that oil and LNG supplies from the Middle East could be disrupted. Nearly all of the shipments of Qatar, the world’s second-largest LNG exporter after the United States, pass through the Strait of Hormuz.
By Tsvetana Paraskova for Oilprice.com
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