Asian LNG Demand Set to Fall Amid Ongoing Conflict

Asian demand for liquefied natural gas is set to decline for a second consecutive year due to the ongoing US-Israeli war on Iran. The conflict has curtailed supplies from the Gulf, tightening market availability and lifting prices to multi-year highs.

Analysts estimate Asian LNG demand will fall by 3-10% from 2025 levels in 2026, with Northeast Asia bearing most of the demand destruction. In this region, China accounts for a key portion of the decline, seen falling by 6.1 million tons year-on-year.

Kpler sees China's LNG demand falling as high prices weigh on industrial gas consumption, while Rystad Energy analyst Lu Ming Pang notes that average temperatures in several months this year were lower than last year, reducing the need for power generation in South Korea and Japan.

Despite high prices and constrained supply, India and Bangladesh continued to actively secure spot cargoes, demonstrating resilient demand. Analysts expect Asian LNG demand to rebound again in 2027, but prices are expected to remain well above pre-conflict levels.

Kpler forecasts Asian spot LNG prices to average $19.30/mmBtu this year and $14.90/mmBtu in 2027, while Rystad Energy sees average prices above $19/mmBtu in 2026 and around $17/mmBtu next year. Wood Mackenzie expects prices to remain elevated even if shipments through the Strait of Hormuz resume by year-end.