Wood Mackenzie Projects Second Annual Asia LNG Demand Drop as Hormuz Disruption Holds JKM Above May Lows
Wood Mackenzie forecasts Asia Pacific LNG demand falling to 257 million tonnes in 2026, a second consecutive decline, as the Iran war disrupts Hormuz supply flows.
JKM, the Asian LNG spot benchmark, was trading at $27.22/MMBtu on Thursday (2026-09-17), more than $11 above the 17-month low it struck during the week of 2026-05-18. That gap between price and demand fundamentals reflects a market pulled in two directions: consumption is falling, but so is available supply.6,2
Wood Mackenzie projects Asia Pacific LNG demand dropping roughly 4.1% to 257 million tonnes in 2026, down from 268 Mt in 2025, marking the second consecutive annual decline in what had been treated as one of the world's most reliable growth markets. Buyers are pulling back. So is supply, disrupted by the Iran war and Strait of Hormuz restrictions that have constricted cargo flows across the region.6
Shell was direct about the supply stakes on June 30 (2026-06-30): Hormuz disruptions could keep global LNG trade flat this year after it reached 422 million metric tonnes in 2025, well short of the growth the company had previously expected.3
India shows the squeeze most acutely. Wood Mackenzie put the country's monthly LNG shortfall at around 1.5 million tonnes. Before the war, India was sourcing close to 60% of its LNG imports from the Middle Eastern corridor. That flow has been heavily interrupted, Oilprice.com senior price reporter Suyash Pande reported on July 22 (2026-07-22).4,7
Activity in JKM derivatives jumped 251% year-on-year, per that same July (2026-07-22) reporting. Hedgers moved aggressively into paper markets as physical cargo uncertainty widened, pushing trading volumes far above underlying spot flows.7
JKM's recovery from the May lows reflects the supply disruption, not a turnaround in demand. Prices fell below $16/MMBtu during the week of 2026-05-18 after both Asia and Europe emerged from winter with more inventory headroom than expected, confounding forecasts of extreme tightness. Once tanks were full, spot buying dropped sharply. Wood Mackenzie noted at the time that local gas production across Asia was declining, China the sole near-term exception, leaving the region structurally dependent on seaborne imports even as short-term demand softened.2,1
The Philippines points to how localised production shortfalls will keep pulling spot cargoes into the region regardless of the broader demand picture. Malampaya, the country's sole domestic gas source, has had its licence extended to 2039. Phase 4 wells are due online in the fourth quarter of 2026, but existing production will cease at end-2027, leaving a supply gap that imported LNG will need to cover.5
Wood Mackenzie projects Asia Pacific demand recovering to 279 Mt in 2027 and 297 Mt by 2028 as geopolitical risk eases and new regas infrastructure comes online. A recent Equirus Securities note adds a complication: as Europe phases out Russian LNG from 2027, discounted Russian cargoes seeking new buyers could add supply to Asian spot markets, limiting upside in any recovery.4
Shell's long-run view remains bullish. The company projects global LNG demand rising roughly 65% by 2050 to close to 700 million tonnes annually, with Asia alone needing around 300 million tonnes per year to meet total gas demand, supported by data centre power consumption and coal displacement in emerging markets.3
How quickly the Hormuz disruption eases is the variable with the most immediate price consequence for JKM between now and the winter demand season. If flows normalise before buyers start restocking, the 4.1% contraction Wood Mackenzie is projecting has room to weigh on spot prices. If Russian cargo redirection to Asia does materialise at scale from 2027, even the recovery the analyst forecasts may land with softer spot pricing than current levels imply.3,4,6