The last LNG ship from the Persian Gulf is about to arrive at the port, and global natural gas supply is nearing the edge of a cliff.

The last batch of LNG ships from the Persian Gulf to import countries in Asia and Europe is about to arrive at the port, and the cliff-edge effect of supply shortage is emerging. Natural gas prices have doubled, and countries highly dependent on imports such as Pakistan are facing a "cut-off" crisis. With Iran blocking the Strait of Hormuz and launching missile attacks on Qatar's largest liquefied natural gas facility, the global LNG supply pattern is facing structural impacts. According to analysis from independent ship brokerage firm Affinity, the LNG shipments from the Persian Gulf that were already en route before the outbreak of war will gradually arrive at ports in the next 10 days, after which some importing countries will lose all supplies from that region. The market has responded ahead of time. The Platts JKM, the benchmark price for LNG in Asia, has doubled to around $23 per million British thermal units since the outbreak of the war, while shipping costs have also skyrocketed due to higher charter rates and longer alternative routes. Qatar's Energy Minister Saad Al-Kaabi stated this week that due to the attacks, 17% of Qatar's LNG production capacity will continue to be shut down in the next three to five years, and may declare "force majeure" on some long-term contracts. This situation will force importing countries worldwide to make difficult choices between competing for alternative sources of supply from countries like the US, switching fuels, and implementing demand rationing. Many resource-poor countries in Asia have begun implementing energy-saving measures, with some countries even implementing a four-day workweek. Supply cliff edge approaching, countdown to last shipments According to ship tracking data, there are still a batch of LNG shipments from the Persian Gulf planned to arrive in Asia the region typically consumes about 90% of exports from this region; another six batches of shipments are still en route to Europe. Once these shipments are delivered, the supply from the Persian Gulf will be completely interrupted. Qatar produces about one-fifth of the world's LNG, but has been forced to stop exports after the blockade of the Strait of Hormuz. This week, Qatar's Ras Laffan LNG plant was further attacked by Iranian missiles, which account for the majority of Qatar's LNG production capacity. Al-Kaabi pointed out that this destruction will lead to long-term damage to the country's LNG production capacity, and explicitly stated that force majeure may be declared on some long-term contracts, with a maximum period of up to five years. This means that the structural supply gap in the global LNG market will last for years, not months. Pakistan is facing the most dire crisis among all affected countries. Last year, about 99% of the country's LNG imports came from Qatar, and the last batch of shipments from Ras Laffan arrived on the second and third days of the war with Iran. Currently, the processing volume at the two LNG import terminals in Pakistan has dropped to one-sixth of normal levels, and according to two sources familiar with the situation, the two terminals will completely cease gas distribution by the end of the month. One terminal operated by Pakistan GasPort, whose chairman and CEO Iqbal Ahmed said the terminal will exhaust its LNG stocks in the next few days. "After that, we will completely cut off supply," he said, "we do not know when the next batch of shipments will arrive." Iqbal Ahmed predicts that if the conflict continues, Pakistan will heavily rely on more expensive and polluting fuel oil for power generation. "I foresee a very difficult year ahead, followed by a difficult period of two to three years," he said. Bangladesh is in a similar situation, but as some LNG comes from outside the Persian Gulf, the situation is slightly better, and the local government has implemented natural gas rationing measures, including closing universities. Although Japan is the world's second largest LNG importer, its supply through the Hormuz Strait accounts for only about 6%, which is relatively low. A Japanese LNG trader said, "Our plan is to purchase from the JKM spot market to make up for the shortfall." But another trader revealed that Japanese buyers are currently taking a wait-and-see approach overall, and plan to return to coal, "only a few buyers are considering spot purchases." Japan also plans to expand the use of coal and nuclear power, and partly restarted the world's largest nuclear power plant in Niigata Prefecture in January. Tight supply may persist for several years, putting structural pressure on the market Before more ships are allowed to pass through the Strait of Hormuz, the global LNG market supply will continue to be tight. Even if the strait reopens, due to the damage to the Ras Laffan facility, about 17% of Qatar's LNG production capacity will still be unable to recover in three to five years, and market supply will remain below pre-war levels. The force majeure clause announced by Qatar's Energy Minister Al-Kaabi means that buyers with long-term contracts with Qatar worldwide will have to rely on the spot market for a long time to supplement their shortfalls. The Asian JKM spot price has doubled since the war, further raising the energy cost pressure on importing countries. For financially vulnerable developing countries, the contradiction between high spot prices and limited foreign exchange reserves will be a core challenge for energy security in the coming years. This article is from "Wall Street Seen", written by Xu Chao, GMTEight editor: Chen Siyu