Global LNG prices hit 3-year high amid West Asia disruption; India gas demand drops 15% in March Y-o-Y

Global LNG supply gap of 6–8 mt pushes prices to 3-year highs, cutting India’s imports and demand, while policy measures prioritise essential sectors amid ongoing West Asia disruptions.

Spot LNG prices have surged to $17–18 per mmbtu in April 2026 — up sharply from $10–11 before the West Asia conflict and briefly touching $22 — triggering a steep contraction in India’s gas consumption to 155 mmscmd in March, down 20% month-on-month and 15% year-on-year, as supply disruptions choked imports.

The price spike follows force majeure on long-term LNG contracts from Qatar and disruption in the Strait of Hormuz, which severely constrained both contracted and spot cargo availability. “Spot LNG prices surged from ~$10–11/mmbtu pre-conflict to ~$17–18/mmbtu currently, highest in nearly 3 years… with supply structurally constrained,” the Equirus Securities report said.

The supply shock has been amplified by a sharp collapse in Qatar’s exports, which fell from around 8 million tonnes per month to just 0.46 mt in April, creating a global supply gap of 6–8 mt per month that cannot be quickly replaced. Even as US volumes remain near record levels, the report noted that “the quantum of Qatar’s absence… cannot be bridged quickly,” keeping markets tight.

India’s LNG imports declined 34% month-on-month to 68 mmscmd in March, driving the overall demand fall, while domestic production held steady at 88 mmscmd, offering limited cushioning.

To manage the shortage, the government invoked the Essential Commodities Act and notified the Natural Gas (Supply Regulation) Order, 2026, prioritising essential segments. City gas distribution (CGD) was protected with full allocation, limiting its demand decline to 5%, while fertiliser, refining and petrochemical sectors saw sharp cuts of 30%, 40% and 56%, respectively.

The report flagged a dual impact for India. On the downside, elevated spot LNG prices are squeezing margins and increasing subsidy burdens. On the upside, India could benefit from a structural shift in global flows. “India may be a structural beneficiary of Russian supply redirection… offering an opportunity to lock in below-market volumes,” it noted, although logistics and regulatory constraints remain key risks.

The US has emerged as the primary balancing supplier, with supply tracking near 11 mt over the past six months, supported by new projects such as Plaquemines and LNG Canada, alongside the start of Golden Pass shipments.

Globally, LNG trade has dropped to around 33 mt in April — down 10% year-on-year and marking a multi-year low, while Europe’s storage remains critically low at 32%, intensifying competition for cargoes ahead of winter restocking.

With 45–50% of India’s gas demand dependent on imports and concentrated in West Asia, the crisis underscores structural vulnerabilities. The report said the disruption should accelerate reforms, including supply diversification, strategic storage creation and infrastructure expansion, to improve resilience in an increasingly volatile global gas market.

source : financialexpress.com