As buyers scramble to find replacement cargoes, more tankers are diverting their shipments towards Asia. The Middle East conflict has halted?tanker?traffic through the Strait of?Hormuz. It also disrupted the supplies of Qatar, which is the world's?second largest?seller of fuel.

Three LNG tankers have diverted to Asia according to ship tracking data from analytics firms Kpler & LSEG.

The Simsimah tanker and the Clean Mistral, both carrying cargoes of U.S. origin from the Plaquemines LNG terminal and Corpus Christi, respectively, shifted their course to the South Atlantic after initially heading towards Europe on March 4. The BW Brussels tanker, which was carrying a Nigerian load from Bonny LNG on March 3, shifted its course from the initial "Atlantic bound" to Asia via Cape of Good Hope.

The U.S. Henry hub gas benchmark price was $2.97 for a million British thermal unit on Thursday, while the European Title Transfer Facility benchmark (TTF) is $17.01 and the Japan-Korea Marker (the Asian benchmark) is $15.495.

The cost of transporting cargoes from Europe to Asia is offset by the higher prices in Asia.

Kesher Sumeet, an analyst at Energy Aspects, said that "flexible U.S. cargoes are likely to start coming to Asia with stronger netbacks" as a result of the recent shift in shipping to Asia.

Some Asian buyers delay spot purchases and do not award tenders because of high prices. Others pay up to secure their cargoes.

"Buyers in South Korea, India and Taiwan have sought replacement spot cargoes. However, many are hesitant to place tenders because of high prices or lack of offers," stated Sumeet.

"India and Bangladesh have reportedly secured'spot cargoes' above $20 per mmBtu. However, the volumes awarded are well below those affected by the Qatari disruptions," said he, adding that Asian buyers would not be able replace all of the lost Qatari shipments for March and April. Bangladesh has secured spot cargoes at $28.28 and $23.08 per?mmBtu from Gunvor and Vitol, respectively.

Another major Japanese utility is also seeking "prompt cargoes" amid concerns that the supply for late March or early April may be tightening, according to Rystad Energy analyst Masanori Odaka.

Cargo diverting could increase competition between the Atlantic basin and Pacific basin. Asia is the largest market for Qatar's LNG, accounting for more than 80%. Europe relies on LNG to fill its gas storage after stopping most Russian pipeline imports following Moscow's invasion of Ukraine.

The U.S. Front-Month Arbitrage pointed firmly to Europe on Friday, as the high freight prices, and a declining JKM-TTF Spread, make Europe more competive, said Spark Commodities Analyst Qasim Afghanistan.

(source: Reuters)