India’s LNG Demand Fell by 1.5 mn t amid West Asia Conflict
LNG demand across South Asia had been projected to rise by 2.7 mn t, or 7 per cent, in 2026. It is now expected to decline by around 6 mn t, while the outlook beyond 2026 has also been downgraded. Bangladesh recorded a reduction of more than 3 mn t, while India and Pakistan each saw demand fall by approximately 1.5 mn t.
India was relatively better placed because it used a tiered demand-management strategy. City gas distribution supplies were protected, while deliveries to fertiliser, refinery and industrial users were reduced in March and April. Wood Mackenzie said countries with diversified supply sources and multiple pricing mechanisms managed the disruption more effectively than those dependent on fewer options.
Daily urea production in India increased by 12,000 to 15,000 t and reached record levels in May and June. Output stood at 2.519 mn t in May and 2.537 mn t in June, supported by government subsidies. Tender award prices rose from $16.8 to $18.8 per million British thermal units (MMBtu) between March and June 2026, reaching $26.4 per MMBtu by September, although tendering demand remained strong.
Governments across the region responded with gas rationing, power cuts, tariff increases and additional budget allocations. Wood Mackenzie said these measures may defer rather than resolve the financial burden, as public finances come under pressure and consumers face higher energy bills and disrupted industrial supply chains. The duration of the conflict remains the main uncertainty. Prolonged hostilities could force governments to choose between energy security and fiscal stability, while buyers may need greater supply diversification, flexible pricing arrangements, stronger infrastructure and improved trading capabilities.