Report: Israel’s strike on Iran raises concerns over LNG supply in Asia

Israel’s recent strike on Iranian nuclear facilities has heightened concerns across Asia's LNG market, prompting importers, traders, and governments to reassess supply risks amid escalating regional tensions, according to a report by S&P Global Commodity Insights, citing sources from Platts.

The "pre-emptive" airstrike coincides with the onset of summer in Asia, a period marked by peak gas demand for power generation. Eric Yep, principal analyst at Commodity Insights, noted that Asia remains heavily reliant on Middle Eastern LNG, with the region accounting for nearly 88% of those exports.

“Importers are actively engaging with suppliers and portfolio players to evaluate contingency plans in case supply routes are disrupted,” Yep told S&P Global. While there have been no immediate interruptions, experts warn that a further escalation could jeopardize critical shipping lanes like the Strait of Hormuz—through which nearly 11 billion cubic feet of LNG and around 20 million barrels of crude oil pass daily.

Following the Israeli strike, Asian spot LNG prices spiked. Platts assessed the July Japan-Korea Marker (JKM)—a key benchmark for LNG deliveries to Northeast Asia—at $13.44 per MMBtu on June 13, marking a 5.38% increase from the previous day.

Shipping companies are also on alert. Japan’s Mitsui OSK Lines has issued safety advisories for vessels in the Persian Gulf, and chartering activity has slowed. “There are no new offers today,” one chartering executive said, pointing to the elevated risks.

South Korea’s energy ministry convened an emergency meeting with LNG importers and expressed readiness to take swift action to mitigate any supply disruptions. China, which now relies on Qatar for roughly one-third of its LNG imports, faces particular exposure due to its ongoing suspension of LNG imports from the United States.