Asian LNG Scramble Diverts US Shipments from Europe
Asian buyers are outbidding Europe for LNG after Middle East conflicts disrupted supply. One U.S. shipment diverted to China for the first time in a year.
A surge in demand for liquefied natural gas across Asia is pulling cargoes away from Europe as regional buyers scramble to secure supplies following major disruptions in the Middle East. According to reports from Singapore and Norway, the shift has prompted at least one shipment from the United States to redirect toward China, marking a potential end to a year-long pause in such trade.
The supply tightening stems from a conflict involving Israel and Iran that began on February 28, which halted traffic through the critical Strait of Hormuz. This closure has blocked shipments from Qatar, the world's second-largest LNG exporter. Consequently, buyers are looking toward other major suppliers, including those managed by Cheniere Energy, Inc., to fill the gap.
Ship-tracking data from Kpler indicates that several tankers originally destined for European ports have changed course. The UMM Ghuwailina, which loaded in Louisiana, initially signaled for Zeebrugge in Belgium before redirecting to Tianjin. This represents the first American cargo headed to the Chinese market since early last year, when trade was stifled by tariffs.
Other notable diversions include the Elisa Ardea, which departed from Texas for the Netherlands but has since turned toward Taiwan. Additionally, the Pan Americas, carrying a cargo from Nigeria, was on its way to Croatia before pivoting toward Asia via the Cape of Good Hope.
The UMM Ghuwailina is currently navigating near the coast of Brazil, and analysts note that its final destination could still change. Yuanda Wang, a senior analyst at ICIS, pointed out that American LNG currently faces significant price hurdles in the Chinese market.
\"U.S. LNG does not have a cost advantage under current tariff levels.\"
Wang further explained that even without tariffs, the delivered cost would still remain above $10 per million British thermal units (mmBtu). However, with Asian buyers currently paying between $20 and $25 per mmBtu for March and April deliveries, the arbitrage window has opened wide enough to justify the long-distance rerouting of global supplies.
