KEY POINTS
- Analysts see Asian LNG demand falling 3 to 10 percent in 2026, with Northeast Asia and China leading the drop as high prices bite.
- Asian spot LNG has more than doubled to $26 per mmBtu, the highest since December 2022, after Iranian attacks cut 17 percent of QatarEnergy’s export capacity.
- Demand could rebound toward 280 million tonnes in 2027 if Qatar resumes exports, but Kpler, Rystad and Wood Mackenzie expect prices well above pre-conflict levels.
Asian demand for liquefied natural gas is set to fall for a second straight year, as the US-Israeli war on Iran curbs Gulf supply, tightens the market and drives prices to multi-year highs that curb consumption.
Analysts expect Asian LNG demand to drop 3 to 10 percent from 2025 levels before rebounding in 2027. Specifically, Northeast Asia bears most of the decline, since countries there can lean on coal and nuclear when gas grows too costly. Moreover, milder temperatures this year trimmed power demand, with generation down year-on-year in both South Korea and Japan.
China leads the pullback
China accounts for a large share of the drop. According to Kpler, its LNG demand will fall about 6.1 million tons year-on-year as high prices squeeze industrial use. Furthermore, energy-intensive sectors such as ceramics, methanol and glass have cut output or shut plants, while inventory drawdowns, rising domestic output and higher pipeline imports have all reduced China’s need for LNG.
However, buyers are not gone, only waiting. According to analyst Nelson Xiong, high prices will delay discretionary restocking, which he expects mainly from late December or the first quarter of 2027.
Prices stay high into 2027
The war reset a market that had been expected to recover. Specifically, cheaper US and Qatari supply was set to lift Asian demand 4 to 7 percent this year, but the February conflict forced QatarEnergy to declare force majeure after Iranian attacks knocked out 17 percent of its LNG export capacity. Consequently, Asian spot prices have more than doubled to 26 dollars per mmBtu, the highest since December 2022.
Still, some buyers held firm. Additionally, India and Bangladesh kept securing spot cargoes, supported by city-gas, fertilizer and power needs. Ultimately, analysts expect demand to rebound toward 280 million tonnes in 2027 if Qatar resumes exports, though Kpler, Rystad and Wood Mackenzie all see prices staying well above pre-conflict levels.
