Natural gas prices in Asia and Europe jumped on Friday as the market digested reports that Qatar has extended the force majeure on its LNG deliveries into November, amid continued blockage of transits through the Strait of Hormuz.

In Asia, the spot LNG price jumped to $23.388 per million British thermal units (MMBtu) on Friday, traders told Bloomberg. The spot LNG price has been hovering at four-year high levels this week, as supply has tightened with the absence of Qatari term deliveries since the Iran war began. Qatar has been one of the world's largest LNG exporters in recent years, so its absence from the market removes a major share of global supply that buyers cannot easily replace. In addition, utilities in Asia have been outbidding Europe for LNG supply this summer amid a shrinking pool of Middle East cargoes, which other producers cannot fully offset with increased deliveries.

In Europe, the LNG price surged this week to the highest level since 2023, while the benchmark natural gas price at the Dutch Title Transfer Facility (TTF) rose by 2% in morning trade in Amsterdam to top $80 (69 euros) per megawatt-hour (MWh).

Europe is heading into winter with gas storage sites barely 63% full as of this week, compared to a five-year average of about 80% (Europe Heads Into Winter With Gas Storage at a Two-Decade Low). EU rules require storage sites to be at least 90% full by November 1, a target that is now well out of reach with roughly two months of the injection season left. A perfect storm of elevated demand—both for refilling depleted storage and for electricity during summer heatwaves—combined with slashed LNG supply, as Qatar's cargoes remain trapped behind the Strait of Hormuz, has pushed European benchmark prices and LNG prices to their highest levels in three years.

Reports from Friday that Qatar's state-owned QatarEnergy has extended through October and early November its force majeure on LNG deliveries to customers further raised concerns about global LNG supply just ahead of winter. Force majeure is a contractual clause allowing suppliers to suspend deliveries due to events beyond their control, and its extension signals Qatar sees no near-term restoration of its shipping route.

LNG traffic at the Strait of Hormuz remains at a standstill, even though oil flows are estimated to have rebounded in recent weeks. Unlike crude oil, LNG cannot be shuttle-shipped through Hormuz and then re-loaded via a ship-to-ship (STS) transfer, the workaround Persian Gulf producers have used in recent months to ship oil to customers. The difference lies in the cargo itself: LNG must be kept at around -162 degrees Celsius in specialized carriers with dedicated terminals, so it cannot simply be pumped between ships at sea the way crude can. Buyers will be watching whether Qatar's force majeure is lifted before the peak winter demand season and whether alternative suppliers such as the United States can add cargoes to partially offset the shortfall.

By Charles Kennedy for Oilprice.com