Iran war shakes global LNG market, Asian prices soar, Pakistan rations energy

Global LNG markets are under pressure as the Iran war blocks 20% of shipments through the Strait of Hormuz and damages Qatar’s liquefaction trains, sidelining 12.8 million tons per year for three to five years, analysts said Thursday.

S&P Global Energy, ICIS, Kpler, and Rystad Energy have cut global LNG supply forecasts by up to 35 million tons, roughly 500 cargoes—enough to meet more than half of Japan’s annual imports or Bangladesh’s needs for five years. Prices in Asia have surged 143% since February 28, hitting $25.30 per million British thermal units (mmBtu), far above the $10 threshold at which emerging market demand normally picks up. Rabobank projects $16.62/mmBtu for 2026, UBS expects $23.60.

Pakistan, heavily reliant on Qatar LNG, is rationing energy through a four-day workweek and curbing demand in fertilisers and textiles. Bangladesh and India are switching to coal and domestic gas while seeking alternative LNG supplies. “There is a demand destruction process going on,” said Iqbal Ahmed, Chairman and CEO of Pakistan GasPort.

The U.S., the world’s largest LNG exporter, is near full capacity with most cargoes locked in long-term contracts, limiting its ability to fill the supply gap. Analysts warn the crisis could permanently dampen LNG growth in Asia and accelerate domestic energy alternatives.

North Asian buyers are largely insulated. China offsets lost Qatari supply via domestic production, Russian pipelines, and Arctic LNG 2 imports, while Japan’s JERA continues to rely on Qatar without adjusting contracts. South Korea’s imports remain stable despite higher prices.

S&P Global Energy anticipates a 33-million-ton drop in exports from Qatar and the UAE this year, with further 19-million-ton annual reductions from 2027–2029 due to delays in Qatar’s North Field and ADNOC’s Ruwais LNG expansion projects, analysts said.