Asian LNG Demand Slumps Amid Iran War Disruptions

Asian liquefied natural gas (LNG) demand is expected to decline for a second consecutive year due to supply disruptions caused by the US-Israeli war on Iran. Analysts estimate that Asian LNG demand will fall between 3% and 10% from 2025 levels in 2026, with Northeast Asia bearing most of the demand destruction.

The conflict has curtailed supplies from the Gulf, tightening market availability and driving up prices to multi-year highs. Asian spot LNG prices have more than doubled to $26 per million British thermal units (mmBtu) since the conflict began.

In Northeast Asia, China is expected to account for a significant portion of the demand decline, with LNG demand falling by 6.1 million tons year-on-year due to high prices weighing on industrial gas consumption. Analysts at Kpler note that energy-intensive sectors such as ceramics and glass have had to cut output or shut plants due to uneconomical fuel costs.

However, analysts predict a rebound in Asian LNG demand in 2027, with Rystad Energy and Kpler forecasting demand to return to around 280 million tonnes next year. Prices are expected to remain well above pre-conflict levels, with Kpler forecasting average prices of $19.30/mmBtu this year and $14.90/mmBtu in 2027.