Supply fractures & War premium dominates
India NG demand moderates to 194mmscmd in Feb'26: NG consumption eased to 194mmscmd in Feb'26 (-2% mom, +2% yoy), stepping back from Jan’s 19-month high of 198mmscmd as seasonal patterns normalised & war signals emerged. Mom decline was driven primarily by a 16% pullback in refinery demand. Excluding highly seasonal power sector, ex-power consumption stood at 174mmscmd, -3% mom/ +2% yoy. Domestic production in mix stood flat at ~91mmscmd & imports at ~103mmscmd -4% mom.
Hormuz disruption moves from risk to reality: Escalation of Iran-Israel conflict into a broader ME theatre has fundamentally altered India's near-term gas supply outlook. SoH, handling ~1/5 of global LNG trade & ~60% of India's imports, has seen flows materially impacted. Major suppliers have invoked force majeure, triggering an acknowledged supply shortfall of ~40-50mmscmd against India's normal daily import requirement of ~100mmscmd. Gov. has prioritised gas allocation (i) domestic PNG, CNG transport, and household supply at 100% of 6m avg.; (ii) fertiliser plants at 70% of baseline; and (iii) other priority industrial sectors at 80%.
Qatar Ras Laffan damage- 12.5mt/yr offline for 3–5 years: Qatar's Ras Laffan LNG complex, world's largest LNG export hub, suffered damage to 2 of its 14 LNG trains. Qatar's upcoming North Field East expansion (32mt by mid-2026) also faces execution uncertainty. Middle East’s spot/short-term LNG exports were ~16mt in 2024, of which Qatar accounted for 7.8mt, these flexible volumes are now under severe pressure. Pre-attack, Global supply ran at ~470–480mt/year (40mt/month); effective run-rate post-damage is likely closer to 32–34mt/month. Recent supply disruptions have materially altered near-term outlook: what had been shaping up as an LNG glut has now been deferred, pushing expectations for lower natural gas prices out by at least a year or possibly longer.
Spot LNG surged >100%, what’s the next ceiling? Prior to disruption, spot Asian LNG had softened to $10.4/mmbtu in Jan'26, a period of relative calm amid glut story materializing globally that had enabled India's broad demand recovery. That has reversed sharply: spot cargoes are now around $20/mmbtu driven by supply deficit, Hormuz transit insurance premia, and a scramble for Atlantic Basin alternatives. On a scenario basis (a) contained disruption with Hormuz gradually re-opening: LNG likely settles $14–16/mmbtu (risk premium residual); (b) sustained physical supply constraint for 4–6 months: $18–22/mmbtu range; (c) prolonged severe disruption lasts till winter of 2027: $24-28/mmbtu+ feasible, though structural supply wave from US, Canada, and Africa provides a ceiling that didn't exist in 2022.
Europe's storage deficit & global demand competition: Europe entered spring injection season with gas storage below ~30% severely lower. European buyers, replacing Russian pipeline gas with LNG, will compete aggressively with Asian importers for spot and short-term Atlantic cargoes through April–September injection window (will take at-least upto 85% of storage) and will need at-least 100bcm of costly LNG to meet demand (exhibit 12). This adds a structural layer of demand competition that partially offsets new supply from US terminals.
Global LNG trade slumps to 10-month low in Mar’26: After Jan’26’s all-time monthly high of 42.8mt, global LNG trade has fallen sharply across subsequent two months. Feb’26 trade eased to 38.3mt (-11% mom) & Mar’26 declined further to 36.3mt (-5% mom) lowest monthly volume in 10 months. Reversal is being driven by supply disruptions Qatar & UAE outages and also Australia’s facility, where cyclone-related shutdowns caused a ~26% output decline with losses offsetting incremental US ramp-up gains. Qatar exports, which had surged to ~8mt in Jan’26 (last full pre-attack month), are now running materially below that level (~2mt in March, mostly vol left before force majeure). US exports remain near record highs and Plaquemines, Golden Pass, and LNG Canada continue to add volumes.
