Asian LNG Buyers Spend $7.4 Billion as Disruptions Send Prices Soaring

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 turned to the spot market after disruptions to LNG shipments through the Strait of Hormuz cut off contracted supplies, pushing up prices. The sharp increase in costs is putting pressure on Asian economies that rely on natural gas for power generation and industrial use.

Qatari LNG shipments through the Strait of Hormuz 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.

Many countries have limited alternatives, and switching quickly to other sources of power risks putting pressure on electricity supplies, leaving buyers dependent on LNG despite higher costs. Asian countries are looking at solar and wind power, coal, nuclear energy, domestic gas production, and pipeline supplies as alternatives to imported LNG.