Asian LNG Demand Set to Fall for Second Year Amid War Disruptions

Asian liquefied natural gas (LNG) demand is expected to decline for the second consecutive year due to supply disruptions caused by the US-Israeli war on Iran.

The conflict has curtailed supplies from the Gulf, tightening market availability and pushing prices to multi-year highs. As a result, analysts estimate Asian LNG demand will fall 3-10% from 2025 levels, with Northeast Asia bearing most of the demand destruction.

Lu Ming Pang, an analyst at Rystad Energy, stated that 'a lot of that demand destruction has been absorbed by Northeast Asia ... they have coal, they have some nuclear availability.' He noted that average temperatures in several months this year were lower than last year, reducing the need for power generation.

China is a key contributor to the decline in Asian LNG demand, with Kpler estimating a 6.1 million ton drop in imports. High prices are weighing on industrial gas consumption, forcing energy-intensive sectors such as ceramics and methanol to cut output or shut plants.

Despite high prices and constrained supply, India and Bangladesh continue to actively secure spot cargoes, demonstrating resilient demand. Analysts predict Asian LNG demand will rebound by 4-7% this year on lower prices fueled by rising U.S. and Qatari supplies.

Rystad Energy and Kpler see Asian LNG demand rebounding to around 280 million tonnes next year, assuming QatarEnergy can resume exports through the Strait of Hormuz and ramp up production by Q1 2027.