Asian Economies Feel Pinch as $7.4B Spent on Spot LNG Amid US-Iran Conflict

India and four of its Asian peers have spent a combined $7.4 billion on spot liquefied natural gas (LNG) since the US-Iran conflict began, more than double the cost of comparable supplies bought under long-term contracts a year earlier.

The five countries - India, Pakistan, Bangladesh, Thailand, and Vietnam - turned to the spot market after disruptions to LNG shipments through the Strait of Hormuz cut off contracted supplies, pushing up prices. This has particularly affected supplies from Qatar, which accounted for about a fifth of global LNG shipments before the conflict.

The price shock is putting pressure on Asian economies that rely on natural gas for power generation and industrial use. It's also prompting countries to reconsider how heavily they should depend on imported LNG over the longer term.

Asian countries are looking at alternatives to imported LNG, including solar and wind power, coal, nuclear energy, domestic gas production, and pipeline supplies. Pakistan is likely to increase its reliance on solar and hydropower, while Bangladesh has spent more than $2 billion replacing lost Qatari LNG supplies and is offering incentives for rooftop solar installations.