Hormuz LNG Halt Drives JKM to $21.82 as Asian Buyers Absorb Prolonged Supply Shock
Strait of Hormuz LNG flows have near-halted, driving the Japan-Korea Marker 60% higher year-on-year to $21.82 and Morgan Stanley to forecast $25 by Q4.
Asian spot liquefied natural gas was trading at $21.82 per million British thermal units on Friday (2026-07-24), about $1.60 above the $20.2 per million British thermal units that traders told Bloomberg the market hit on July 16 (2026-07-16), as buyers continued to pay up for supply certainty following a near-total halt in LNG tanker traffic through the Strait of Hormuz.7,5
That halt, confirmed by data from tanker-tracking firms as of July 20 (2026-07-20), was the immediate catalyst for the latest leg higher. Reuters reported that LNG shipments through the Strait had ground to a virtual standstill over a three-day period while oil tanker traffic shrank considerably, with renewed military conflict in the region driving the disruption.7
The July 16 (2026-07-16) reading of $20.2 per million British thermal units, the highest since late March, was itself the product of an extended rally rather than a single day's move. The Japan-Korea Marker, the benchmark for spot LNG deliveries to Northeast Asia, gained 10% in the week to July 16 (2026-07-16) alone, rose 25% over the four preceding weeks, and is up more than 60% on an annual basis, Anadolu Ajansı reported.5,7
Analysts cite two overlapping supply shocks behind the squeeze: US-Iran tensions disrupting Gulf shipping lanes, and a temporary production suspension at Qatar, a major LNG exporter to Asian buyers. Together those factors withdrew enough committed supply to force spot buyers into aggressive re-pricing.1
The pressure has landed as Asian import demand is already climbing. Asia's LNG imports were on course to hit a six-month high in July (2026-07), Reuters reported around July 13 (2026-07-13), while European imports were falling toward their lowest level in nearly two years. That demand split has redirected Atlantic cargoes eastward.6
One Nigerian cargo, loaded in the week of May 11 (2026-05-11), was diverted from its European destination to Asia after the trans-basin price spread widened sharply, Kpler principal insight analyst Go Katayama noted. Front-month arbitrage opportunities in the global LNG market have "increased significantly," favouring Asian buyers across several major export regions, according to Qasim Afghan, an analyst at Spark Commodities.1
Morgan Stanley has set a bullish target of $25 per million British thermal units for the third and fourth quarters of 2026, implying more than 30% upside to the forward curve and a price not reached since early 2023. The bank pointed to recovering demand in India and China and Europe's narrowing window to rebuild gas inventories before winter.3
Shell's Energy Outlook, published June 30 (2026-06-30), framed Hormuz as the key swing variable: normal shipping through the Strait would likely keep global LNG trade volumes flat in 2026, with growth resuming only in 2027 as new projects come online. That was written before the July escalation. The volume forecast may yet prove correct; the price forecast has already been overtaken.4
The bearish case rests on normalization. China, the world's second-largest LNG buyer, showed soft spot demand as recently as May 15 (2026-05-15), traders said — a reminder that Chinese appetite can shift the Asian supply-demand balance quickly. If Qatar restores production and Hormuz traffic recovers, the supply shock that drove the rally dissipates faster than Atlantic diversions can compensate. A diverted Nigerian cargo buys time for a single buyer. It does not replace Qatari volumes into the market.2,1
Qatar's production restoration timeline and the recovery pace of Hormuz tanker traffic, which had visibly thinned by July 20 (2026-07-20), are the two variables most likely to move the JKM from Friday's (2026-07-24) level. At $21.82, the benchmark sits well below Morgan Stanley's $25 target but also more than 8% above the July 16 (2026-07-16) spike point, still bidding higher even as the initial shock should be digesting.7,3