Rising LNG prices, driven by tight global markets this winter, have pushed Asian LNG benchmark prices above Brent crude for the first time in years. This price shift suggests that oil-based fuels are now more cost-competitive than natural gas in Asia.
According to Bloomberg, the premium of LNG over Brent crude could lead to fuel switching in price-sensitive Asian economies, where natural gas is being replaced by oil and oil-based fuels.
In early January, the Japan-Korea marker price for LNG was 22% higher than Brent on an energy-equivalent basis, according to Bloomberg calculations. During the first week of January, spot LNG prices for February delivery to Northeast Asia hit a one-month high, as reported by Reuters.
This price hike was driven by soaring European gas prices, fueled by rapidly depleting inventories and the cessation of Russian gas flows to Europe through Ukraine.
Siamak Adibi, an analyst at consultancy FGE, told Reuters that the suspension of Russian gas via Ukraine could result in a loss for Europe, requiring increased LNG imports to balance the market in 2025.
Europe’s benchmark natural gas prices rose sharply on the first trading day of 2025, following the disruption of Russian pipeline deliveries via Ukraine. This halted supply has created unease in the European gas market, prompting buyers to increase LNG purchases, which has further pushed up prices.
With European inventories quickly depleting and currently below the five-year average for this time of year, Europe will need to secure more LNG to meet both this winter’s demand and to replenish storage for the upcoming winter season.
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