Qatar LNG restart is suspended due to the situation in the Middle East, and winter gas price risk premium may surge (J.P. Morgan)
J.P.
J.P. Morgan tracks global LNG supply and points out that the escalation of the conflict between Iran and the United States has led to attacks on Qatar LNG facilities and Saudi oil tankers, and has blocked passage in the Strait of Hormuz. Qatar's previously accelerated LNG restart progress has been suspended. At the same time, more U.S. LNG flows to Asia, while European gas storage levels are low. If Qatar cannot restore supply before winter, it will significantly push up winter gas prices and term structure risk premiums. One-sentence conclusion: The geopolitical conflict in the Middle East is evolving from event-driven to a structural energy supply risk, and the upward risk of LNG prices in winter has increased significantly. Positive/negative: Positive for U.S. LNG exporters (such as Cheniere Energy), European natural gas storage operators, and some oil and shipping companies. The market's optimistic expectations for the recovery of supply from Qatar may be too optimistic, and winter gas prices have not yet fully factored in this geopolitical risk. Catalysts: 1) The restoration of navigation in the Strait of Hormuz; 2) Actual damage assessment and repair progress of Qatar’s LNG facilities; 3) Winter temperature forecast and changes in European natural gas inventories.