Middle East Conflict Drives LNG Prices to Record Highs

China and India's liquefied natural gas (LNG) imports have fallen to multi-year lows due to the ongoing Middle East supply crunch, but industry executives expect demand to rebound once the conflict ends.

The US-Iran war has prevented Qatar and the United Arab Emirates from exporting most of their LNG via the Strait of Hormuz, where a fifth of global supplies used to pass. As a result, Asia's spot prices have surged to nearly $30 per million British thermal units (MBtu), up from a pre-war range around $10 per MBtu.

Shell estimates that the world has lost about 36 million tons of LNG from the Middle East so far this year. GAIL Chairman Deepak Gupta said that prices have 'hit through the roof' and are impacting demand in India, particularly among price-sensitive sectors. He added that many industries switch to alternative fuels when gas is not viable for them.

ExxonMobil's vice president for global LNG marketing, Andrew Barry, expects substantial LNG demand growth in China over the long term due to extensive import infrastructure built along the country's east coast. He noted that there is a lot of latent demand that is price sensitive and that Exxon remains confident in its diversified LNG portfolio.