Against the backdrop of escalating geopolitical tension, several tankers transporting Qatari liquefied natural gas (LNG) have resumed their journeys through the Red Sea after a temporary pause. Four vessels have resumed their course through the critical Red Sea trade route which is responsible for approximately 12 percent of global shipping traffic.
Qatari LNG tankers
The LNG tanker Al Rekayyat, which had been halted on its Red Sea route since January 13, has recommenced its journey through the Red Sea and is currently en route to Qatar, as indicated by the Marine Vessel Traffic tracking data.
The vessels Al Ghariya, Al Huwaila, and Al Nuaman, transporting Qatari LNG, have also resumed sailing but have altered their course to the south, despite signaling the Suez Canal as their destination. These tankers had slowed down and circled off the coast of Oman on January 14.
Suspension of operations
Major shipping companies suspended operations in the Red Sea following rising tension in the last month. The Suez Canal, a vital artery for global trade, particularly for Qatari LNG exports to Europe, has been greatly affected. Qatari LNG could potentially navigate around the Cape of Good Hope, south of Africa, to reach Europe. However, this would extend the voyage duration by at least 10 days, saving on canal transit fees.
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Gas markets
Despite disruptions and geopolitical uncertainties, both Europe and the United States currently maintain robust gas storage. Moreover, weather forecasts are predicting slightly warmer temperatures for the northern hemisphere, excluding the U.S.’s ongoing cold snap.
However, Dutch Title Transfer Facility (TTF) gas futures, the benchmark European contract, experienced a 1.10 percent decline, trading at nearly €30 ($32.67) per megawatt-hour on Tuesday. Europe’s LNG imports reached a record high last year. However, demand in 2024 has been weak due to a warmer-than-expected winter and high storage levels.
Qatar, the world’s second-largest LNG exporter, shipped approximately 14 million tonnes of gas to Europe in 2023, with all deliveries passing through the Suez Canal. In 2022, Qatari LNG trade through the canal between Qatar and Europe stood at 19.84 million tons. Meanwhile, Europe’s gas storage facilities were 98 percent full in early November, reflecting ample supply for consumption during peak demand in cold weather.
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