India faces potential natural gas supply curtailments of up to 1.5 million tonnes (mt) per month, the largest exposure in the South Asia region by quantity, according to Wood Mackenzie. The West Asia conflict has adversely affected the LNG market across Asia, leaving South Asian countries grappling with severe shortages. Spot prices are at levels that translate directly into demand curtailment, industrial fuel switching, and, in the most acute cases, fertiliser plant shutdowns and power sector load shedding.
Supply disruption and impact on South Asia
Asia accounted for nearly 90 per cent of Qatari and UAE LNG shipments transiting the Strait of Hormuz (SoH) in 2025, Wood Mackenzie reported. Within Asia, South Asia is among the most affected. The closure of the SoH impacted 46 per cent of India’s LNG imports from Qatar, forcing the world’s fourth largest LNG importer to diversify cargoes with the US filling the major gap, followed by Oman, Nigeria and Angola.
Key impacts include:
- Gas allocation diverted to essential sectors.
- Urea output squeezed by Qatari LNG curtailments.
- Energy-intensive industries cutting run rates and switching to propane, fuel oil and naphtha.
- The fuel-switching dynamic carries geopolitical complexity: India imports 80–85 per cent of its LPG via the SoH, meaning switching fuels trades one supply concentration risk for another.
Asian LNG demand heading for decline
Wood Mackenzie anticipates Asian LNG demand is heading for a second consecutive year of decline. The forecast for Asia Pacific demand is summarised in the table below:
| Year | Asia Pacific LNG Demand (mt) |
|---|---|
| 2024 | 278 (peak) |
| 2025 | 268 |
| 2026 | 257 |
| 2027 | 279 (forecast recovery) |
| 2028 | 297 (forecast) |
Wood Mackenzie stated: "A tighter global LNG market is doing what it always does. It separates buyers with contracted cover and fuel-switching options from those without." Maoping Hu, principal analyst for gas and LNG at Wood Mackenzie, added: "Japan and China are better insulated. South Asia is absorbing a genuine shock. But even the more resilient markets are making decisions now on nuclear, on coal, on long-term contracting diversification that will shape their LNG demand trajectories well into the next decade."
Diversification and future outlook
On LNG sourcing, Equirus Securities noted: "As Europe legally phases out Russian LNG from 2027, discounted Russian cargoes seeking alternative destinations could add further diversification lever for India." Wood Mackenzie expects Asia Pacific LNG demand recovering to 279 mt in 2027 and reaching 297 mt by 2028, as geopolitical risk subsides, new regas infrastructure comes online, and structural demand growth resumes across South-East and South Asia. That recovery path implies a net gain of 40 mt over two years, a significant volume that will require both new supply and a normalisation in spot pricing to materialise. The pace and shape of that recovery will depend on the duration and severity of Middle East supply disruption, the trajectory of spot prices, competition from oil products, the rate at which Chinese and South Asian gas demand rebounds when prices fall, nuclear restart timelines in Japan and South Korea, and the speed at which South-East Asian power gas demand progresses.
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