Strait of Hormuz Closure Triggers LNG Supply Crisis in South Asia

Event summary

  • The closure of the Strait of Hormuz is expected to reduce South Asia’s LNG demand by 2–3 million tonnes (Mt) through Q3 2026.
  • QatarEnergy’s force majeure impacts approximately 20% of global LNG supply, severely affecting South Asian importers.
  • India sources 59% of its LNG imports from Qatar and the UAE, facing potential curtailments of up to 1.45 Mt per month.
  • Pakistan, reliant on Qatar for nearly all of its 2025 LNG, is implementing demand curtailment and fuel switching measures.
  • Bangladesh’s LNG imports are heavily reliant on Qatar and the UAE, triggering widespread gas rationing and costly spot procurement.

The big picture

The Strait of Hormuz closure highlights the vulnerability of South Asian economies to geopolitical risks and their dependence on Middle Eastern energy supplies. This disruption underscores the urgent need for diversification of energy sources and investment in alternative infrastructure. The crisis is likely to accelerate the adoption of renewable energy sources, but the transition will be hampered by the immediate supply shortfall and rising energy costs.

What we're watching

Pricing Dynamics
The lagged effect of oil-indexed pricing will amplify import cost pressures for South Asian buyers, potentially triggering further industrial unrest and inflationary pressures.
Supply Alternatives
The ability of South Asian nations to secure alternative LNG sources from outside the Middle East will be limited by increased global competition and infrastructure constraints.
Industrial Impact
The extent to which energy-intensive industries in India can adapt to gas curtailments and transition to alternative fuels will determine the long-term impact on industrial output and competitiveness.