Wood Mackenzie Warns APAC Faces Multi-Year LNG Supply Loss After Hormuz Closure
The strait's closure wiped roughly 80 million tonnes of annual LNG supply, leaving Asia-Pacific buyers scrambling for alternative sources as demand falls for a second straight year.
The closure of the Strait of Hormuz removed around 80 million tonnes per annum of LNG from the global market, equivalent to approximately one-fifth of total supply, Wood Mackenzie said on Friday (2026-09-11). The consultancy warned that Asia-Pacific needs substantially greater flexibility in sourcing liquefied natural gas as the region confronts what it described as a multi-year supply loss.7
Asia's exposure is acute. Nikhil Babu, Wood Mackenzie's research analyst for APAC Power and Renewables, noted that 90% of LNG transiting the Strait of Hormuz is destined for Asia, making the region disproportionately vulnerable to any sustained disruption from the conflict involving Iran. JKM, the Asian LNG spot benchmark, held at $24.81/MMBtu on Friday (2026-09-11).7
The timing compounds an already weakening demand picture. Wood Mackenzie forecast Asia-Pacific LNG demand at 257 million tonnes in 2026, down 4.1% from 268 million tonnes in 2025 — a second consecutive annual decline. Asian utilities have been forced into fuel switching, with the conflict pushing spot prices sharply higher and pushing buyers toward alternatives.6,5
India is bearing some of the sharpest near-term pain. Wood Mackenzie estimated the country faces an LNG shortfall of around 1.5 million tonnes per month, a deficit that cannot be absorbed quickly given the region's infrastructure constraints and limited regas capacity. In South Asia more broadly, Bangladesh has increased coal-fired generation and electricity imports, according to government data.4,3
The scale of the Hormuz disruption has forced a rapid reassessment of import assumptions across the region. Wood Mackenzie cut its forecast for Asian LNG imports to around 5 million metric tonnes from an earlier estimate of 12.4 million tonnes, based on a two-month disruption scenario. Whether the conflict extends beyond that window is the variable the market is now pricing.3
Coal has filled some of the gap. Asian utilities have turned increasingly to coal-fired power as LNG prices rise and supply routes remain constrained, industry officials said. Newcastle coal physical traded at $140.75 per tonne as of Friday (2026-09-11), with coal-to-gas switching economics running in coal's favour across much of the region given current spot LNG levels.3
The medium-term supply picture offers limited comfort. Wood Mackenzie expects Asia-Pacific LNG demand to recover to 279 million tonnes in 2027 and reach 297 million tonnes by 2028, on the assumption that geopolitical risk subsides and new regasification infrastructure comes online. But that recovery thesis depends on a conflict resolution timeline that remains deeply uncertain.4
One potential offset sits on the supply side. As Europe legally phases out Russian LNG from 2027, discounted Russian cargoes seeking alternative buyers could redirect toward Asia, adding some diversification to the region's supply mix, Equirus Securities said in a recent note. Australia's output growth may also help over time: some forecasters estimate Australian production could pass Qatar's and reach up to 100 million metric tonnes per annum within a decade, though that timeline extends well beyond the current crisis.4,1
The vulnerability runs deeper than the Hormuz closure alone. Local gas production across Asia is falling, China excepted in the near term, Wood Mackenzie said in analysis published during the week of May 18 (2026-05-18). The consultancy has flagged for some time that the region needs investment in domestic supply to reduce its exposure to external shocks of precisely the kind now materialising.2
JKM's flat opening on Friday (2026-09-11) at $24.81/MMBtu sits in mild contrast to the bullish supply narrative. Analysts say high prices and supply uncertainty are already curbing LNG demand growth across the region, which limits how far spot prices can run even with 80 million tonnes of annual supply removed from the market.3,7
The more concrete signal for buyers is whether new long-term supply agreements from non-Gulf producers accelerate in response to the disruption. Wood Mackenzie's call for greater sourcing flexibility implies a shift away from spot-heavy procurement strategies that left several APAC buyers exposed when the strait closed. How quickly that reorientation happens — and at what contract price — is what traders and portfolio managers are watching into the fourth quarter.7