Wood Mackenzie

Strait of Hormuz closure threatens South Asia LNG supply

Wood Mackenzie analysis finds South Asia LNG demand could be 2–3 Mt lower through Q3 2026, forcing higher energy cost and industrial rationing

LONDON/HOUSTON/SINGAPORE, March 11, 2026 (GLOBE NEWSWIRE) -- INSIGHT FOR IMMEDIATE RELEASE

Wood Mackenzie | www.woodmac.com

South Asia’s LNG market faces a major supply shock following the closure of the Strait of Hormuz, with regional demand expected to be 2–3 million tonnes (Mt) lower through Q3 2026, compared to pre-crisis projections, as countries struggle to replace disrupted Qatari supplies, according to new analysis from Wood Mackenzie that considers a scenario of two months’ supply disruption.

QatarEnergy’s force majeure threatens around 20% of global LNG supply and creates severe supply pressure for South Asian importers. India relies on Qatar for more than half of its LNG imports, while Pakistan sourced almost all of its 2025 LNG imports from Qatar. Bangladesh also depends heavily on Gulf suppliers, with Qatar and the UAE accounting for nearly three-quarters of its LNG imports last year.

Wood Mackenzie previously projected South Asia’s LNG demand would grow by 2.7 Mt (7%) in 2026, but a two-months closure of the Strait of Hormuz is likely to halt that expansion.

“LNG demand across South Asian markets is now likely to remain flat at best,” said Akshay Gupta, research analyst, gas & LNG at Wood Mackenzie. “While the region is highly dependent on LNG from the Middle East South Asian buyers will find it hard to replace disrupted Qatari volumes due to increase competition for available spot LNG cargoes which has pushed LNG prices above US$20/mmBtu”.

In addition, the lag in oil-indexed LNG pricing formulas means contract prices will rise later in the year. With most LNG contracts linked to oil prices on a three-month lag, import costs for South Asian buyers are expected to increase from June 2026 onwards, adding further pressure to regional energy bills.

India faces industrial gas curtailments

According to Wood Mackenzie, India sourced 59% of its 2025 LNG imports (26 Mt) from Qatar and the UAE. The Strait of Hormuz closure could curtail up to 1.45 Mt of LNG deliveries per month, but India might be looking to replace only 50% of the shortfall.

Petronet LNG has declared force majeure to its offtakers, while gas aggregators such as GAIL and GSPC are expected to reduce supply to industrial customers while prioritising gas for essential sectors.

“Gas rationing across industries has already begun after aggregators and distribution companies reduced supply,” said Gupta. “Energy-intensive sectors such as refining, petrochemicals, glass and ceramics are now facing gas shortages that could cut output as switching to oil it’s going to be equally challenging given India’s reliance on the Middle East for oil imports”

Pakistan faces severe LNG supply vulnerability

Pakistan imported almost all of its 2025 LNG supply (6.6 Mt) from Qatar, leaving the country highly vulnerable to supply disruptions. Pakistan had already cancelled 35 cargoes for deliveries in 2026 because of stagnant demand and increased domestic gas supply availability. Wood Mackenzie estimates that the Strait of Hormuz closure will result in Pakistan reducing LNG demand further, and only half of the remaining Qatari deliveries will be replaced. Gas distributors have already reduced regulated regasified LNG deliveries to prioritise domestic consumption.

To manage the supply gap, Pakistan is deploying a mix of demand curtailment, fuel switching and renewable generation expansion to rebalance the power system, albeit this will take time to be implemented. Operators had previously held back more than 300 mmcfd of domestic gas production to meet LNG contract minimums, and this volume could now be released to help offset lost imports.

Bangladesh forced into costly spot LNG procurement

Qatar and the UAE supplied 3.6 Mt, or 63%, of Bangladesh’s LNG imports in 2025. The current disruption could result in only half of these volumes being replaced given high spot LNG prices. The supply shock has triggered widespread gas rationing across the economy. Petrobangla has imposed four-hour daily gas supply cuts to CNG stations, reducing road transport demand, while textile and ready-made garment manufacturers face significant production curtailments.

“The surge in spot LNG prices will place severe strain on Bangladesh’s energy budget, forcing costly procurement while rationing supply to priority sectors,” said Gupta.

For further information please contact Wood Mackenzie’s media relations team:

Mark Thomton
+1 630 881 6885
Mark.thomton@woodmac.com

Chris Boba
+44 7408 841129
Chris.Boba@woodmac.com 

Hla Myat Mon
+65 8533 8860  
hla.myatmon@woodmac.com 

Angelica Juarez
angelica.juarez@woodmac.com

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