LNG shipping stocks edged slightly lower over the past month, with the UP World LNG Shipping Index (UPI) slipping 1.33% to 165.31 points, while remaining near its annual highs. Although the market moved sideways, major geopolitical shifts—particularly Israel’s strike on Iranian nuclear facilities—have reignited global focus on energy security and the resilience of LNG supply chains. For the LNG shipping sector, this evolving landscape underscores the need for diversified and secure maritime routes, particularly for Europe. Meanwhile, structural changes continue to unfold across the industry. The sector's transformation, from long-term contract dependency to increased short-term and spot activity, signals a new era driven by flexibility and efficiency. Technological advances, expanded global supply, and the continued strength of the American FOB model have positioned LNG shipping as a critical and adaptable component of the energy mix. Despite lingering risks, the long-term outlook remains optimistic.
UPI & SPX
The UP World LNG Shipping Index, which tracks listed LNG shipping companies, lost 2.22 points (1.33%), closing at 165.31 points, while the S&P 500 index lost 0.15%. The chart below illustrates the performance of both indices with weekly data.
Week 25-2025: Chart of the UP World LNG Shipping Index with S&P 500 (Source: UP-Indices)
Broader view
During a one-month break in our reports, UPI paused and stayed near the top values of this year, or the resistance, in other words. A significant amount of change occurred in the world during this period.
The State of Israel took advantage of a window of opportunity and attacked Iran’s nuclear facilities, having previously eliminated or weakened its allies in Lebanon and Gaza. Despite the expected riskiness of the strike, there has been no adequate Iranian response so far, and the question is what Iran is still capable of. Not willing, but capable. However, other journalists are sufficiently addressing this issue. While the Strait of Hormuz is a critical location for oil, this is far from the case for gas. The leading producer at risk is Qatar, which is close to Iran and, according to Reuters, is leaving its returning empty LNG tankers on the high seas. Qatar’s customers are mainly Asian countries, just as they are the primary recipients of Arab oil.
The Israeli attack came before the start of the peak season, when demand is lower. If the Strait were to be closed, spot orders would likely increase, leading to higher tanker rental prices and, consequently, higher gas prices.
Like analysts before World War I, we believe that this will be a short and victorious war. However, there will undoubtedly be a further reassessment of energy supply security. Following the Evergreen accident in the Suez Canal and Russia’s energy strike on Europe, this marks another shift in global perception.
As gas is proving to be the only rapid source of electricity in the near future (the nuclear renaissance will emerge later), we believe that further development will occur in two key areas. The first will be near gas pipeline supplies. In Europe’s case, this will involve Norway, North Africa and Kazakhstan. However, there will also be developments in the LNG maritime transport sector, where safe alternatives will be sought. For Europe, these will undoubtedly be the US and African countries, especially those independent of the Suez Canal.
Constituents
I will use the monthly break to reflect on investments in LNG maritime transport companies, which may provide readers with guidance for further analysis. This is an industry that I have been following since 2015, and a few years later, the first version of the stock index was created. At that time, the sector was still in its infancy. The technical highlight was the second generation of tankers, with DFDE and TFDE predominating, which represented a touch of revolutionary progress and economic efficiency. The domain was transport to Asia, mainly from Australia and Qatar. Long-term contracts, often lasting twenty years or more, played a significant role in the industry’s development. Many of them are still running.
The first wave of the American LNG revolution triggered the transformation of this sector into a standard industry. It was not a technological change, but a quantitative one. The American Free-on-Board approach is also crucial, as it provides the necessary freedom and reduces commercial risk. It means that once the gas has been loaded, the supplier does not care where the cargo will be unloaded. I consider this to be one of the most important points in favour of American gas. After all, this is the basis for Poland’s shift towards LNG, for example.
Growth has led to significant technological changes, resulting in an order-of-magnitude increase in the efficiency of current tankers and, consequently, a decrease in costs. This, together with geopolitical changes and the expansion of production and infrastructure, has made LNG a robust and reliable source of energy.
However, increased options are leading to shorter contract lengths, down to a few years. It is virtually certain that if a customer needs a short-term or longer-term contract, they will find an affordable and modern ship and LNG supplier. A parallel can be drawn with food delivery services, whose arrival has significantly transformed the dining experience. It has reduced restaurant attendance but ensured almost constant access to food services.
One-off orders will increase their share. This will, of course, lead to changes in companies’ cash flow and thus to the strengthening of sales departments and possible specialisation.
It is in the interest of the sector to see growth not only among producers but also among customers and liquefaction sites, where the importance of LNG storage in the form of FSUs will grow.
Of course, everything could turn out entirely differently. The primary risk is the cancellation of the American FOB, which, unfortunately, cannot be ruled out under the current American administration. In my opinion, this step would have a more significant impact than the closure of the Strait of Hormuz.
Either way, the outlook for the sector remains optimistic.
Crystal Ball
Despite the growing global uncertainty caused by the US administration, our outlook remains optimistic. However, we expect increased volatility in the coming weeks. LNG spot rates rise, but the impact remains marginal for most UPI constituents. The market is watching for potential breakouts at key resistance levels, which could determine the next direction of prices.
Our outlook remains steadfastly positive in the long term. The burgeoning demand for LNG, bolstered by situational or management-driven actions and the potential for new long-term contracts, paints a promising picture. Investors should watch policy developments, market competition, and upcoming corporate earnings for further direction.
Established in 2020, the UP World LNG Shipping Index is a rules-based stock index family designed to measure the performance of publicly traded companies worldwide involved in the maritime transportation of liquefied natural gas (LNG). This unique index covers 19 companies and partnerships worldwide, representing over 65% of the world’s LNG carrier fleet in 2020. The UP Index offers premium services with freemium and trial access to charts. With Freemium, users can access the basic UPI vs. S&P 500 chart after completing an email registration. The trial includes full access for fourteen days.
Source: By Tomas Novotny, UP-Indices.com