India Faces Higher LNG Prices and Margin Pressure Ahead

India's Liquefied Natural Gas (LNG) demand remains firm despite high spot prices, but rising gas costs could squeeze margins for downstream players. The country may see higher LNG prices from September, according to a report by Equirus.

The report notes that India's LNG imports accounted for 59% of total gas consumption in July 2026, the highest share since July 2021 when it stood at 65%. The share has also risen by 15 percentage points from 44% in April 2026. With domestic gas production remaining flat, 'India remains highly exposed to elevated spot LNG prices,' Equirus noted.

Globally, the LNG exports outside the Middle East were expected to rise by around 40 mt year-on-year in 2026, driven by new and ramping-up projects, particularly in the US. However, under Shell's early-third-quarter resolution scenario, a decline of around 45 mt in Middle Eastern exports would more than offset this growth, resulting in a net contraction of about 5 mt in global LNG exports.

A year-long disruption to Middle Eastern flows is now expected, which would overwhelm new LNG supply wave. In this scenario, Middle Eastern exports may decline by more than 65 mt, compared with only around 40 mt of incremental supply from the rest of the world. As a result, the anticipated easing in supply conditions could be delayed until 2027, despite additional capacity coming online in North America.