India Faces Higher LNG Prices as Middle Eastern Exports Disrupt Global Supply

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

In July 2026, LNG imports accounted for 59% of total gas consumption in India, the highest share since July 2021 when it stood at 65%. The country's reliance on imported LNG is increasing, with domestic gas production remaining flat.

Globally, LNG exports outside the Middle East are expected to rise by around 40 million tons year-on-year in 2026. However, Equirus notes that a decline of around 45 million tons in Middle Eastern exports would more than offset this growth, resulting in a net contraction of about 5 million tons in global LNG exports.

A prolonged disruption in Middle Eastern exports could lead to a global LNG trade contraction by roughly 27 million tons, representing a deterioration of about 22 million tons from the early-resolution case. This scenario would delay the anticipated easing in supply conditions until 2027, despite additional capacity coming online in North America.

For India, recent gas consumption and import data indicate that LNG demand has remained resilient even at spot prices above $20 per million British thermal units (mmbtu). Equirus notes that near-term adjustment may likely occur through higher gas costs and margin compression across downstream players, rather than an immediate sharp decline in volumes.