Asian Nations Diversify Energy as US-Iran War Spikes LNG Prices

The US-Iran war has disrupted approximately 20% of the global liquefied natural gas (LNG) supply, primarily by halting Qatari shipments through the Strait of Hormuz. This supply shock has forced nations including India, Pakistan, Bangladesh, Thailand, and Vietnam to rely on the spot market, spending a collective $7.4 billion—more than double the cost of previous long-term contracts. Consequently, Asian spot prices for October delivery have remained above $25 per MMBtu, the highest levels since 2022.

At the Gastech conference in Bangkok, industry leaders discussed the resulting market volatility. Balaji Krishnamurthy of Chevron Corp. stated that prices are unlikely to decrease for at least six months, noting that Australian LNG currently commands a premium. While executives from GAIL and PetroChina International acknowledged a decline in demand from India and China, they characterized the slump as a temporary reaction to high prices rather than a permanent shift.

To mitigate future volatility and blackouts, developing nations are diversifying their energy mixes by increasing investments in solar, wind, hydropower, nuclear, and coal. However, some executives maintain a bullish long-term outlook. Lorenzo Simonelli of Baker Hughes argued that population growth and the expansion of AI data centers make natural gas a destination fuel, asserting that energy demand is not slowing despite higher borrowing costs. This tension between short-term price-driven demand destruction and long-term industrial growth continues to shape global energy investment strategies.