LNG

The arbitrage for U.S. LNG cargoes is now favouring deliveries to Europe over northeast Asia, according to Spark Commodities, as shipping costs and regional price spreads render Atlantic-to-Pacific deliveries uneconomic for the remainder of 2026.

European gas buyers are starting to outbid Asia for LNG cargoes to refill storage ahead of winter, marking a decisive shift in the global gas arbitrage, said Menelaos Ydreos, secretary general of the International Gas Union (IGU).

Stalled US-Iran negotiations are manifesting LNG price premiums this autumn, with the average price for an October cargo delivered to Northeast Asia forecast at $22.50 per MMBtu. The geopolitical premium is firmly engrained in global LNG markets, fuelling a bullish sentiment in Asia where the price of delivered LNG increased by$0.85/MMBtu week-on-week to nearly$22.10/MMBtu.

The arbitrage for flexible US LNG cargoes heading to Asia is open with spreads between the Japan Korea Marker (JKM) and the Dutch TTF widening, as the tepid recovery of Qatari and UAE LNG exports is unlikely to outpace rebounding Asian demand.

Most European LNG buyers are expected to import less than anticipated due to higher prices and tighter markets, with Poten & Partners estimating around 17 mtpa of demand destruction this year, particularly in Italy and Belgium.

Five US-loaded LNG cargoes have diverted from European or Egyptian destinations into the Pacific Basin in the four weeks through mid-May: the WilPride, SK Audace, Umm Al Houl, Adamastos and Sea Navigator. Four are signalling 'For Orders' and one (the Adamastos) is bound for Dahej, India, LNG Journal’s data shows.

The arbitrage for shipping US LNG cargoes to Northeast Asia has fallen to –$0.2/MMBtu, the lowest level since February 2025 – even though Atlantic freight rates have declined by more than $70,000 per day over the past month, a move that would typically bolster Asia-bound LNG shipping.

Traders and LNG portfolio players are competing for regasification capacity to land LNG cargoes in Europe, though the European LNG arbitrage stayed closed for much of 2025. According to Platts data, the economics begin to reflect oversupply with the LNG-TTF price spread widening.

Energy Aspects remains bearish against JKM–TTF Q1 26 spreads amid dwindling freight rates. Some recent fixtures for two-stroke LNG vessels in the Atlantic basin fell below $100,000 per day, opening the arbitrage for US LNG heading to markets east of Suez via the Cape of Good Hope.

Not a single US LNG cargo transited the Panama Canal during the first three weeks of November, according to S&P Global Commodities at Sea data, as the arbitrage window prompted most tankers to head to Europe rather than Asia.