Red Sea disruptions fragmenting global LNG trade into regions

LONDON It has been four months since a liquefied natural gas (LNG) tanker has passed through the narrow strait separating the Arabian Peninsula and Africa, testament to how violent attacks there have upended global energy trade.

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While dozens of such ships used to traverse the Bab al-Mandab Strait, a vital Red Sea conduit, each month prior to the escalation of the Israel-Gaza war, attacks by Yemen's Houthi rebels have brought that number down to zero since mid-January.

Vessels have been forced to reroute around Africa to transport fuel between the Atlantic and Pacific basins, leaving buyers with a limited pool of suppliers unless they are willing to pay for higher shipping costs. The result is that the global market for LNG is growing increasingly fragmented.

"At the moment, more than ever, you have cargo segmentation of the two basins, and it will be more challenging economically to move a cargo from one basin to another," said Mr Patrick Dugas, head of LNG trading at TotalEnergies, in April.