Dutch and British benchmark gas prices jumped 11% on the news of a partial strike in Australia began at 1 p.m. and after maintenance in Norway curbed supply. Australia’s Gorgon and Wheatstone plants accounted for about 7% of global LNG supply last year. This underscores the fragility of the market following last year's energy crisis.

According to Reuters, as mediation talks between unions and Chevron's (CVX) collapsed, workers at liquefied natural gas (LNG) projects in Australia have started their strike motion today, on Friday, September 8.

Notably, Australia has been one of the world's biggest LNG exporter, with most of its LNG export being naturally directed to Asia. The dispute over wages and conditions at Chevron's Gorgon and Wheatstone operations had supported British and European gas prices, as traders fear lower Australian supplies would intensify competition for other sources of the super-chilled fuel.

Members of the Offshore Alliance union said they would be completely closed for two weeks from September 14. However, the impact on LNG supply is unlikely to be immediate, with gas consumption in both Europe and Asia currently depressed even though winter months are approaching. Still, the prospect of future supply disruptions pushed prices higher, as it led to increased competition for cargoes during peak winter demand in the Northern Hemisphere. We expect the price effect having a good chance of extending towards the beginning of this year’s heating season.