Asia’s LNG demand is set to fall for a second consecutive year as the Middle East conflict disrupts supply flows, pushes spot prices higher and forces energy buyers across the region to cut consumption, switch fuels and rethink long-term supply strategies.

 

Wood Mackenzie forecasts Asia Pacific LNG demand will decline to 257 million tonnes (Mt) in 2026, down from 268 Mt in 2025 and a record 278 Mt in 2024. The downturn comes as tighter global supply, disrupted Qatari shipments and soaring spot prices expose major differences between countries with secure contracts and those reliant on volatile markets.

 

Asia accounted for nearly 90% of Qatari and UAE LNG shipments passing through the Strait of Hormuz in 2025, leaving many buyers vulnerable to prolonged disruption. The impact, however, varies sharply depending on each country’s contracted supply, spot market exposure and ability to switch fuels.

 

"A tighter global LNG market is doing what it always does. It separates buyers with contracted cover and fuel-switching options from those without,” said Maoping Hu, principal analyst for gas and LNG at Wood Mackenzie. 

 

“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.”

 

Wood Mackenzie’s Asia Pacific LNG Demand Short Term Tracker highlights a market facing disruption on a scale that is driving structural changes rather than temporary adjustments.

 

LNG demand across China, Japan, South Korea and Taiwan is expected to drop to 191 Mt in 2026 from 202 Mt in 2025, with each market responding differently to the supply shock.

 

China remains the most protected major buyer, entering 2026 with the region’s largest inventory buffer and most diversified supply portfolio. LNG imports are forecast at 62.4 Mt, down from 66.4 Mt in 2025, while regasification utilisation falls to 29% against capacity of 218.3 Mt.

 

Japan’s strong contract position provides significant protection. More than 90% of its 2026 LNG demand is covered by term agreements, limiting exposure to spot market volatility. While Middle East disruption could affect up to 0.5 Mt per month of supply, diversification options make the impact manageable.

 

South Korea faces greater pressure. KOGAS has two 2 million tonne-per-year contracts linked to Ras Laffan Train 6, which was damaged in Iran’s missile attacks, potentially disrupting supply for three to five years. With spot exposure exceeding 20%, higher-cost replacement cargoes could significantly increase costs for consumers.

 

Taiwan has moved aggressively to replace lost supply. A potential Strait of Hormuz closure could cut up to 0.7 Mt per month of LNG deliveries, but increased US LNG imports have helped offset the shortfall. The country is expected to replace more than 75% of lost volumes through spot purchases.

 

South Asia is facing the sharpest disruption, with India, Pakistan and Bangladesh struggling under higher prices and tighter supply.

 

India faces potential LNG supply cuts of up to 1.5 Mt per month, the largest exposure in the region. Gas has been redirected toward essential sectors, while fertiliser production, industrial activity and power generation face pressure. Companies are rapidly switching to propane, fuel oil and naphtha, although this creates additional risks because India imports 80–85% of its LPG through the Strait of Hormuz.

 

Pakistan returned to the spot market in April 2026 after a two-year absence, seeking three cargoes for April–May delivery after receiving no LNG shipments since early March. The country can secure one SOCAR cargo per month from Azerbaijan and may now begin releasing previously withheld domestic gas supplies.

 

Bangladesh has shown stronger resilience, securing spot cargoes despite high prices. Petrobangla purchased two spot shipments from Gunvor and Vitol at $23–28/mmbtu for March delivery and sought three additional cargoes for early April 2026.

 

Unlike Northeast and South Asia, Southeast Asia’s LNG demand is expected to continue expanding, rising from 27 Mt in 2025 to 31 Mt in 2026 and reaching 39 Mt by 2028.

 

Indonesia recorded LNG demand growth of more than 20% in the first half of 2026, driven by rising electricity demand and the retirement of diesel power plants. Regasification utilisation is expected to reach 57% in 2026.

 

Malaysia saw LNG demand increase by more than 40% in the first half of 2026, fuelled by rapid data centre growth and coal plant retirements. Regas utilisation is forecast at 45% in 2026, rising to 69% by 2028.

 

Singapore has managed supply disruption through aggressive spot procurement, sourcing LNG from Australia, the US and Mozambique. However, LNG bunkering growth is expected to slow in 2026 as high prices weigh on shipping economics.

 

The Philippines faces a different challenge, with declining domestic gas production creating future supply concerns. While Malampaya’s licence has been extended to 2039 and new wells are expected online in late 2026, production from existing wells is expected to fall sharply after 2027.

 

Thailand remains Southeast Asia’s most exposed LNG market, with continued reliance on spot purchases leaving it vulnerable to price spikes. The country restarted coal plants in March 2026 as geopolitical risks intensified.

 

Vietnam is only beginning to build its LNG market, receiving its first commercial deliveries into the Nhon Trach 3 and 4 LNG-fired power plants in January 2026. PVGas also signed its first multi-year LNG agreement with Shell, covering 0.4 Mtpa from 2027 to 2031.

 

Wood Mackenzie expects Asia Pacific LNG demand to rebound to 279 Mt in 2027 and 297 Mt by 2028 as geopolitical pressures ease, new regasification capacity comes online and economic growth restores demand.

 

The projected recovery represents a 40 Mt increase over two years, requiring both additional supply and lower spot prices.

 

However, the market remains exposed to uncertainty over the duration of Middle East disruption, future LNG prices, competition from oil products, nuclear restarts in Japan and South Korea, and the pace of gas demand growth across Southeast Asia.

 

The current crisis has reinforced a central lesson for Asian LNG buyers: supply security is no longer just about securing volumes — it is about building flexibility for a market where geopolitical shocks can quickly reshape global energy flows.