Daily LNG price update (Yemen)

The Brent oil price took off last night as the Middle East launches a war on Yemen. As I write the price is up 4.5% at $59.06.

The war will very likely be brief and is not a major strategic threat in the region. Here are some links:

John Kemp sums up why it matters at all:

unnamed Air strikes by Saudi Arabia and its allies in Yemen have sparked a modest rise in oil prices of $3 per barrel, even though Yemen plays a marginal role in the global oil market.

Yemen produces just 130,000 barrels per day, according to the U.S. Energy Information Administration (EIA), about 0.1 percent of global production and the same as Italy or Kansas.

The country shares a long border with southwest Saudi Arabia but violence in that area poses no threat to the main Saudi oilfields, which are concentrated in the northeast of the kingdom.

More significantly, Yemen forms one coastline of the Bab el-Mandeb Strait, which connects the Red Sea with the Gulf of Aden and the Arabian Sea.

On average almost 4 million barrels of oil pass through the Bab el-Mandeb Strait every day en route from the main Gulf oilfields to refineries in the Mediterranean and Europe.

Should settle down quickly, though you never know in war. For now it is still pushing along the short squeeze.

In LNG, the indicative contract price jumped to $8.62mmBtu:


Yemen LNG is so far unaffected:

Exports from Yemen’s only LNG export facility are running as normal, a spokeswoman from French oil giant Total said.

Following unrests in the country Yemen LNG facility in Balhaf declared force majeure on exports of liquefied natural gas stopping operations on January 18. The force majeure was lifted later in the month.

The Yemen LNG project, operated by France’s Total, consists of two liquefaction trains with a total capacity of 6.7 Mtpa. It has three long-term contracts to supply LNG to GDF Suez, Kogas and Total Gas & Power.

That’s looking shaky.

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