LNG plunges to a four-month low, reopening of the Strait of Hormuz is not the end—market is balancing between Asian demand and European restocking battles this summer

(1) Asian spot LNG prices fell to a four-month low this week, with the average price for August delivery to Northeast Asia estimated at $15.30 per million British thermal units, a sharp decline from last week's $19.15. This was mainly due to the resumption of transport through the Strait of Hormuz, easing concerns over supply disruptions.(2) Although Iran has agreed to waive transit fees through the Strait of Hormuz for a 60-day negotiation period and requires ships to apply for passage 48 hours in advance, the market remains vigilant regarding geopolitical tensions. Full restoration of Gulf supply to normal levels may take several months, with lag effects in rebooting the supply chain.(3) Asian demand is expected to remain strong in the third quarter, driven by replenishment needs and the summer peak for electricity usage. At the same time, Qatar's output has not yet returned to pre-war levels via Hormuz, so Asian companies may still extract long-term contract cargoes from the Atlantic Basin to meet terminal demand.(4) Europe's market fundamentals continue to reflect a tight supply scenario. Most cargoes were diverted to the region during periods of strong Asian premiums, restricting Europe's spot availability. Throughout the summer, Europe needs approximately one additional cargo per day to return inventory to normal levels.(5) Investment funds accelerated selling of TTF futures last week. While they still hold a considerable traditional net long position, momentum and sentiment have noticeably turned negative. This leaves room to increase positions when fundamentals support a rebound, and winter risks are currently being significantly underestimated. Funds may target re-entry opportunities in the fourth quarter.(6) Atlantic route LNG freight rates have fallen to $93,000 per day, while the Pacific route stands at $80,750 per day. The previous month's arbitrage window for US shipments to Northeast Asia via the Cape of Good Hope points towards Europe, whereas shipments via the Panama Canal clearly target Asia. Regional price differences continue to guide trade flows toward further differentiation.