Higher LNG Prices Likely From September Affecting Margins
Domestic gas production has remained flat, leaving India highly exposed to elevated spot LNG prices, Equirus added. On a global level, exports of LNG outside the Middle East were expected to rise by around 40 mn t year on year in 2026, driven by new and ramping projects, particularly in the United States. However, geopolitical developments remain pivotal to supply balances.
Under Shell's early third-quarter resolution scenario, a decline of around 45 mn t in Middle Eastern exports would more than offset growth elsewhere, producing a net contraction of about 5 mn t in global LNG exports, the report said. With Middle Eastern flows yet to normalise the window for an early resolution has closed and the outlook has shifted towards a year-long disruption.
Equirus argued that a year-long disruption would overwhelm the new LNG supply wave, with Middle Eastern exports potentially declining by more than 65 mn t compared with roughly 40 mn t of incremental supply from the rest of the world. In that case global LNG trade could contract by roughly 27 mn t, representing a deterioration of about 22 mn t from the early resolution scenario.
The consultancy noted that the anticipated easing in supply conditions could be delayed until 2027 despite additional capacity coming online in North America, and that a prolonged disruption would intensify competition between Europe and Asia for flexible US LNG, keeping spot prices elevated through winter. Near-term adjustment for India may come through higher gas costs and margin compression rather than an immediate sharp decline in volumes.