Asian Economies Stung by $7.4 Billion Spot LNG Bill Amid US-Iran Conflict

India and four other major emerging Asian LNG buyers have spent a combined $7.4 billion on spot liquefied natural gas since the US-Iran war 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 put pressure on Asian economies that rely on natural gas for power generation and industrial use.

Qatari LNG shipments have largely stopped since the fighting began in late February, forcing buyers to seek replacement cargoes in the spot market. The price shock could undermine LNG's position as a relatively reliable fuel for developing economies.

Asian countries are looking at alternatives such as 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 over $2 billion replacing lost Qatari LNG supplies and is offering incentives for rooftop solar installations.