LNG Vessels Begin To Reroute Away From Red Sea On Rising Tension

(Bloomberg) -- Liquefied natural gas tankers are diverting their routes from the Red Sea as violence linked to the Israel-Hamas war threatens longer journeys and delays of the super-chilled fuel.

At least five ships have changed course since Friday away from waters off the coast of Yemen, an unavoidable waypoint for ships using the Suez Canal that links Europe and Asia, according to ship-tracking data compiled by Bloomberg. It isn’t immediately clear if all ships were diverted due to the tension. 

Companies that transport natural gas, including BP Plc and Norway’s Equinor ASA, are choosing to avoid the Red Sea as Iran-backed Houthi militants stepped up attacks in support of Hamas. Qatar, one of the world’s largest LNG producers and a key supplier to Europe, continues to transit the Red Sea toward the Suez Canal, according to shiptracking data. 

The diversions are also happening at a time when the world’s other vital ocean-to-ocean waterway for LNG, the Panama Canal, is being severely restricted by drought. That means more US LNG shipments to Asia may need to take longer routes around southern Africa.

European natural gas prices jumped 7% on Monday amid growing fears of disruptions to energy flows. Still, North Asia, home to the biggest LNG importers, are well stocked for winter and buyers aren’t rushing to find alternative supplies yet, according to traders.

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