Qatar’s unexpected halt in liquefied natural gas (LNG) production has sent ripples through the global energy market, putting approximately 20% of the world’s LNG supply at immediate risk. The news has driven Japan Korea Marker (JKM) benchmark prices up by more than 50%, reaching around $16-17/mmbtu—a level modestly above last June’s rally during the 12 Day War.
Morgan Stanley noted that Qatar, responsible for exporting about 80 million tons per annum (mtpa) of LNG, is a key supplier to Asian markets. The current outage reflects short-term disruption expectations, estimated at one to two weeks. Prompt price surges mirror these limited concerns, but analysts warn that any signs of extended delays could see prices rise further, with the potential for a market shock akin to Russia’s interruption of supply during the Russia/Ukraine crisis in 2022.
For now, the base case scenario points towards a swift resolution. Should production resume soon, analysts expect JKM prices to swiftly decline to $10-11/mmbtu, with further easing below $10 in the coming months, aligning with prior forecasts.
Despite the current volatility, broader gas market fundamentals remain relatively soft. The winter demand peak has already passed, March weather forecasts suggest milder temperatures, and the Golden Pass LNG project’s first train is nearing initial cargoes, adding extra supply capacity to the market.
