The global LNG supply-demand balance is unlikely to be substantially altered by the announcement of a two-week ceasefire between the US and Iran, because of expected continued uncertainty over shipping insurance, security and production facilities.
Just under 1.2mn t of LNG across 15 carriers remains trapped west of the strait of Hormuz, data from vessel tracker Kpler show (see table). One vessel, the 155,000m³ Gaslog Skagen, has delivered to Kuwait's 24mn t/yr Al Zour LNG import terminal three times since the war in the Middle East began, and is charting a course for Al Zour at present.
It is likely that these stranded cargoes will attempt an eastbound transit through the strait of Hormuz during the ceasefire, traders said, but it is still unclear how transits will be accomplished. Two of these cargoes had attempted to transit the strait on 6 April, but were turned away, based on vessel-tracking data.
It is unclear how many vessels could transit during this ceasefire period, and which vessels or commodities would be given priority. An average of 11 vessels/day transited the strait in the past five days, way below pre-war levels of around 125 daily transits. There are around 800 vessels carrying crude oil, refined products, metals and other goods trapped west of the strait of Hormuz. It will be difficult for all these carriers to exit the Mideast Gulf, traders said. Commodities destined for countries deemed "friendly" to Iran may be prioritised — including China, Russia, India, Iraq and Pakistan — market participants said, but nearly all cargo owners and shipowners are still awaiting instructions on how to transit the strait at present.
Transit levels have not increased since the announcement of the ceasefire.
Iran's reported demand for a $2mn toll fee for vessels transiting the strait will add to costs, with larger LNG carriers able to spread the cost more broadly across a larger cargo. Higher insurance costs from additional war risk premiums (AWRPs), higher calls from protection and indemnity clubs, as well as the potential need for kidnap and ransom cover are likely to prevent ballasting LNG carriers from westbound transits through the strait of Hormuz at present, traders said. It is also unclear which firms would be willing to provide cover for transits through the strait. A ballasting transit into the Mideast Gulf for loading a cargo would be likely to incur the $2mn fee twice, once on the way in and again on the way out, traders said.
AWRPs for transits through the strait of Hormuz are only offered on a case-by-case basis, market participants said. War hull coverage for LNG carriers could be as high as 5pc of the vessel cost, compared with 0.2pc before the war, traders said.
State-owned QatarEnergy (QE) is reported to have started mobilising workers in anticipation of resuming LNG production at the now 64.2mn t/yr Ras Laffan terminal. But it is unclear how quickly this could be achieved, and most market participants have allocated at least several weeks if not several months for production to fully ramp up at Ras Laffan.
With most LNG shipowners unlikely to allow their vessels to transit the strait of Hormuz to load at Ras Laffan, QE could utilise its own fleet to load cargoes, but the company would still need to secure insurance cover.
| LNG cargoes stranded in Mideast Gulf | $/mn Btu | |
| Vessel | Assumed cargo (t) | Additional transit fee |
| Rasheeda | 117,000 | 0.33 |
| Al Sahla | 95,000 | 0.40 |
| Al Kharaitiyat | 95,000 | 0.40 |
| Al Ghashamiya | 95,000 | 0.40 |
| Umm Al Amad | 92,400 | 0.41 |
| Mihzem | 78,200 | 0.49 |
| Patris | 76,500 | 0.50 |
| Lebrethah | 76,500 | 0.50 |
| Mraikh | 76,500 | 0.50 |
| Gaslog Skagen* | 68,000 | 0.56 |
| Al Daayen | 66,700 | 0.57 |
| Mubaraz | 62,500 | 0.61 |
| Fuwairit | 60,700 | 0.63 |
| Disha | 60,000 | 0.64 |
| Al Rayyan | 45,500 | 0.84 |
| *likely for Kuwait | ||
| — Argus, Kpler | ||
