Australian gas demand is currently well supplied and domestic prices are sitting well below international levels, but tension is building after a sudden spike in LNG prices across North Asia and Europe following fresh conflict in the Middle East and damage to a major export plant in Qatar. This comes on top of ongoing debate in Canberra about new rules for the east coast gas market including a possible windfall profits tax on oil and gas producers and a formal gas reservation policy to keep more supply at home.
In global markets, LNG prices in North Asia have roughly doubled since the latest conflict between the United States and Iran began, jumping to more than $US22 per million British thermal units after a missile strike cut almost 20% of capacity at one of the world’s biggest LNG hubs in Qatar. This is a loss estimated at about $US20 billion in annual export revenue. European gas benchmarks also climbed more than 10% to their highest level in over three years. At the same time, Australian east coast spot gas has been trading around $9 to $10.75 a gigajoule, roughly one third of current Asian LNG levels, helped by solid local supply and no immediate rush by producers to reprice contracts.
Large industrial gas users remember how quickly things unravelled in 2022 when coal plant outages, an early winter and low renewable output collided with the post‑Ukraine invasion price shock and pushed local energy bills sharply higher. Manufacturing groups are pressing east coast producers to prioritise domestic customers at what they see as reasonable prices and they argue that another round of price spikes could damage competitiveness and jobs. At the same time, energy user associations suggest producers may be showing a degree of restraint on local pricing while the federal government finalises a gas reservation scheme and weighs tougher measures, with both industry and policymakers keen to avoid a confrontation that could trigger heavier regulation.
Looking ahead, the broader picture seems finely balanced. If supply disruptions in the Middle East persist and the Strait of Hormuz remains constrained into the northern winter, some analysts expect average east coast prices to more than double to around $28 a gigajoule between May and August. Others point out that strong local supply, steady contracting and temporary constraints on LNG exports, such as cyclone‑related port disruptions in Queensland and northern Australia, could keep domestic prices lower for longer. The outcome is likely to depend on how long global tensions last, how quickly damaged infrastructure is repaired and whether new Australian policies nudge more gas toward local users or push investment away from future supply.
