India Defies Global Energy Crisis with Unwavering Gas Demand

The global energy market is experiencing extreme volatility due to geopolitical tensions in the Middle East. The conflict has disrupted gas supply chains, leading to a surge in prices, with Asian spot LNG reaching $26 per mmBtu, its highest level since December 2022.

This has strained national budgets across Asia, with LNG demand projected to decline by 3-10% this year. China has pivoted towards increasing domestic gas production and reducing reliance on international imports. Japan and South Korea have also seen a decrease in demand due to milder winters.

India, however, remains a consistent buyer of spot LNG, with its demand anchored by the City Gas Distribution and fertilizer industries. These sectors account for approximately 70% of India's total LNG imports. Despite high prices exerting pressure on the domestic economy, India has managed to restore its supply to between 90-95% of requirements through strategic efforts.

Market recovery depends on how quickly gas supplies from Gulf nations can return to normalcy. Agencies estimate that Asian LNG demand could climb back to 280 million tons by 2027 if QatarEnergy resumes full exports. However, prices are unlikely to return to pre-war levels anytime soon, with Rystad Energy projecting prices to hover around $17 next year.