Japan’s day-ahead spot electricity prices surged on Wednesday to the highest level in three and a half years as soaring fuel costs, heat waves, and a weakening Japanese currency have combined to push power prices higher this summer.
Data from the Japan Electric Power Exchange showed that nationwide day-ahead spot price surged to $0.15 (24.78 Japanese yen) per kilowatt-hour (kWh) on Wednesday, Bloomberg reports. The price has surged by 24% so far this week and hit on Wednesday the highest level since January 2023.
Weather forecasts point to temperatures above 40 °C (104°F) in multiple prefectures in Japan on Wednesday, well above the normal for this time of year.
The heat waves in parts of Japan are expected to last into early August, putting additional upward pressure on power prices.
These have surged in the past two weeks as the price of spot LNG deliveries into northeast Asia soared to a four-month high amid the renewed hostilities in the Middle East and the return of the blockage of the Strait of Hormuz, which cut off Qatar’s LNG supply again.
As of the end of last week, spot prices of liquefied natural gas in Asia had surged by 10% in one week to the highest level since March, as the re-escalation in the Middle East and the fresh near-halt to shipping through the Strait of Hormuz rekindled fears of supply in the world’s biggest LNG-importing region.
Last Thursday, spot LNG prices in Asia hit $20.2 per million British thermal units (MMBtu).
On Tuesday this week, the benchmark LNG price further rose to as much as $21.61 per MMBtu.
Qatar, the world’s second-largest LNG exporter before the war, had just seen volumes recovering as of the end of June, before the latest flare-up abruptly ended the rebound in Qatari shipments through the Strait of Hormuz.
Europe’s benchmark natural gas prices have also jumped following the escalation over the Strait of Hormuz, which disrupted LNG shipments out of the Middle East again.
By Tsvetana Paraskova for Oilprice.com
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