The Japan-Korea Marker (JKM) for LNG spot cargoes delivered to Northeast Asia touched fresh four-month highs in late July, reaching approximately $21.0 per million British thermal units (MMBtu) according to Trading Economics contract-for-difference data. The benchmark has surged 32.6% over the past month and 75.5% compared to the same period last year, reflecting a market where geopolitical risk premia dominate underlying supply-demand fundamentals.
The rally has been driven almost entirely by escalating tensions in the Middle East. Attacks on an LNG carrier near the Strait of Hormuz in early July initially sent JKM from the mid-$16s/MMBtu to the mid-$18s/MMBtu over the span of two days, according to Global LNG Hub data from July 13. By late July, Quantum Commodity Intelligence reported JKM at a four-month high, with the Middle East crisis refocusing buyers onto severely limited spot cargo availability.
European gas prices reinforced the same signal. TTF, the Dutch Title Transfer Facility benchmark, hit €60 per megawatt-hour as LNG supplies from Qatar and the United Arab Emirates were effectively halted, creating what market participants described as a bidding environment for prompt cargoes. Pakistan paid what is believed to be its highest purchase price for spot LNG since 2022, as the South Asian country faces a severe energy crisis, Quantum reported.
The supply disruption sits against a structural backdrop of rapidly expanding global LNG capacity. Global LNG supply is forecast to reach approximately 475 million metric tons in 2026, a 10.2% increase year-on-year, according to Kpler data cited by Reuters. The bulk of the increase comes from the United States, where export capacity is expected to rise to 130 million tons in 2026 from 90 million tons in 2024. Analysts from Rabobank, Rystad, and Kpler forecast JKM averaging between $9.50 and $9.90 per MMBtu for full-year 2026, suggesting current spot levels are well above sustainable equilibrium.
But the transition to looser markets depends entirely on the Strait of Hormuz normalizing. The early-July spike moderated mid-month as temperature forecasts in Northeast Asia were revised downward and the US Energy Information Administration reported a larger-than-expected storage build, but the underlying risk of supply disruptions from Qatar and the UAE persists. Freeport LNG maintenance in Texas has further reduced US feedgas demand, easing some global tightness but also signaling that US export capacity is not immune to operational constraints.
Asian LNG demand is forecast to rebound 4% to 7% in 2026, led by China and India, according to Rystad, Kpler, and S&P Global Energy. ADI Analytics projects Asian LNG imports up approximately 10% overall, with India and Southeast Asian nations like Vietnam adding regasification and gas-to-power capacity. Europe still needs roughly 5% more LNG in 2026 to refill storage and replace Russian pipeline gas, but the continent has also become more price-sensitive, capping extreme price spikes relative to the 2022-23 crisis.
On the supply side, the US feedgas flows to LNG export terminals averaged 17.2 to 17.4 billion cubic feet per day (bcfd) in July, slightly below June due to Freeport maintenance, according to Trading Economics. Japan's METI reported LNG inventories for power generation at 2.11 million tonnes as of June 21, up 0.7 million tonnes week-on-week, indicating comfortable stock levels heading into peak summer demand in Northeast Asia.
The bull case for JKM rests on a persistent or escalating Middle East disruption. If Qatar and UAE shipments remain constrained, available spot cargoes will continue to command steep premiums, and any further incident near the Strait of Hormuz could push JKM toward or above $25/MMBtu. The bear case hinges on normalization of Hormuz transit and the wave of new supply from the US Gulf Coast and Eastern Mediterranean. Analysts broadly view the current price spike as a risk-driven overshoot relative to structurally loosening fundamentals, but timing the normalization is the critical unknown for procurement planners.
LNG buyers face a divided market. Prompt spot cargoes are scarce and expensive, with JKM near four-month highs driven by Middle East risk premia that show no near-term sign of resolution. For buyers with flexibility on delivery windows, the forward curve offers a steeper discount than normal: analysts expect full-year 2026 JKM averages of $9.50-10/MMBtu, implying current spot levels could fall significantly once Hormuz transit normalizes. Buyers able to defer spot purchases or secure term volumes through mid-2027 should do so. The structural supply wave from the US and Qatar is real and large, but it cannot reach Asian markets if shipping routes through the Strait of Hormuz and Red Sea remain compromised. Buyers without storage or contract flexibility should hedge at least 60% of Q4 2026 requirements, as the risk of a supply-driven winter price spike is elevated. Monitor Freeport LNG restart timing and any diplomatic progress on US-Iran negotiations as potential catalysts for a sharp normalization.