Escalating attacks on ships in the Red Sea by Houthi militants have prompted LNG traders to prioritize inter-basin trading over transactions between regions. Heightened global tensions, coupled with uncertainties in the Panama and Suez canals, have hindered the redirection of cargoes between the Pacific and Atlantic. Despite previous economic incentives favoring LNG movement from the Pacific to the Atlantic, rising geopolitical risks and logistical constraints have led to a decline in such arbitrage opportunities. The delays at the Panama Canal, in particular, have complicated trading activities between basins. Vessel rerouting from the Suez Canal to the Cape of Good Hope, driven by Red Sea tensions, may impact shipping demand and freight rates, but weak demand, subdued arbitrage economics, and increased vessel availability are tempering potential price hikes. Traders are exercising caution, with safety considerations driving a focus on inter-basin rather than cross-regional trading amid the prevailing global uncertainty.

SOURCE:GOOGLE