Gulf Conflict Sparks Multi-Year LNG Supply Loss in Asia-Pacific

The ongoing conflict in the Gulf has led to a significant disruption in liquefied natural gas (LNG) supplies, affecting the Asia-Pacific region disproportionately. The closure of the Strait of Hormuz has removed around 80 million tonnes per annum of LNG from the market, equivalent to about a fifth of global supply.

Nikhil Babu, Research Analyst for APAC Power & Renewables Research at Wood Mackenzie, warns that this disruption is not just a short-term price spike but a multi-year supply loss. The Iranian strikes on LNG plants at Ras Laffan have removed significant Qatari export capacity for up to five years.

While reopening the strait will restore much of the lost supply, Babu notes that some Qatari export capacity remains offline, and the region's power systems are ill-equipped to absorb a shortfall amidst record temperatures. The brunt of the risk is backloaded into the second half of 2026, when power demand peaks.

To mitigate these risks, Babu recommends diversification of gas supply routes and counterparty arrangements for utilities, as well as an accelerated focus on renewable energy and storage development for developers.