Asian LNG Demand Set for Second Straight Year of Decline Amid Supply Disruptions

Asian LNG demand is projected to decline for a second consecutive year due to supply disruptions caused by the US-Israeli war on Iran, which has curtailed exports from the Gulf region.

The conflict, which began in February, led QatarEnergy to declare force majeure and suspend exports after Iranian attacks knocked out 17% of its LNG export capacity. As a result, Asian spot LNG prices have more than doubled to $26 per million British thermal units (mmBtu), their highest since December 2022.

Analysts estimate that Asian LNG demand will fall by 3-10% from 2025 levels, with Northeast Asia bearing most of the demand destruction. China accounts for a key portion of the demand decline, seen falling by 6.1 million tons year-on-year due to high prices weighing on industrial gas consumption.

However, despite high prices and constrained supply, India and Bangladesh continued to actively secure spot cargoes, demonstrating resilient demand. Analysts predict that Asian LNG demand will rebound in 2027, with Rystad Energy and Kpler forecasting a recovery to around 280 million tonnes next year.