Asian LNG Demand Set to Rebound as Prices Normalize
The recent conflict in the Middle East has led to depressed LNG demand in China and India due to spiking prices. Industry executives say that consumption in key Asian gas import markets is set to rebound once the war ends and prices normalize.
The Strait of Hormuz, a critical chokepoint for LNG supply, has been affected by the conflict. Persian Gulf producers have managed to find workarounds for oil deliveries, but LNG flows have remained non-existent or very low due to physical and chemical difficulties in ship-to-ship transfers.
Asian spot LNG prices have reached their highest level since 2022 at $25 per million British thermal units (MMBtu) for October delivery into northeast Asia. PetroChina's CEO, Luo Yizhou, says that the current lower purchases are a direct result of soaring prices and that demand would rebound once prices return to a normal range below $10 per MMBtu.
Yaoyu Zhang, Assistant CEO & Global Head of LNG and New Energies at PCI, notes that Chinese demand growth may not be as rapid as it was before Russia's invasion of Ukraine. Industry executives emphasize the importance of cost, reliability, and flexibility when securing energy molecules, and China is building out its energy infrastructure with this in mind.