Spot liquefied natural gas (LNG) freight rates continue to weaken despite increasing reports of vessels diverting away from the Red Sea, according to Spark Commodities.
Spark said on Tuesday that its Spark30S Atlantic dropped by $2,000 to $63,250 per day, while the Spark25S Pacific dropped by $9,750 to $71,000 per day.
“Diverting a voyage via the Cape of Good Hope from the Arabian Gulf to NWE adds only $0.09/MMBtu to the freight cost versus via Suez given Suez Canal savings, but increases laden voyage time by 9.5 days,” Spark said.
“Meanwhile, the front month DES LNG cargo price in Northwest Europe, at $8.883/MMBtu, sits at its lowest since summer 2023 amid a well supplied European market,” the company said.
LNG tankers and other vessels have been diverting away from the Red Sea that leads to the Suez Canal, to take the longer route around Africa via the Cape of Good Hope.
This comes as Yemen’s Houthis reportedly continue to target commercial ships in the Red Sea in response to Israel’s attacks on Gaza.
The US military struck and destroyed four Houthi anti-ship ballistic missiles this week, according to a statement issued by US Central Command.
“These missiles were prepared to launch from Houthi-controlled areas of Yemen and presented an imminent threat to both merchant and US Navy ships in the region,” the statement said.
Due to the attacks, several reports said this week, citing mostly shipping data, that state-owned LNG giant QatarEnergy has also started diverting its LNG carriers from the Red Sea.
LNG Prime invited QatarEnergy LNG, the unit of QatarEnergy and the operator of the giant Ras Laffan LNG complex, to comment on the matter, but we did not receive a reply by the time this article was published.
Qatar’s prime minister, Mohammed bin Abdulrahman Al Thani, said on Tuesday during the World Economic Forum in Davos that “LNG… as any other merchant shipments.. will be affected” by tensions in the Red Sea.
Al Thani said there are alternative routes, but they are “less efficient” than the current route.
He said that Qatar has always preferred diplomacy over military solutions and he believes that the focus should not be on small conflicts, but also on the main conflict in Gaza Strip, because once this conflict is resolved, everything else will be resolved.