The LNG bulls are watching Hormuz. India's collapsing gas demand is the bigger tell.
A forecast 8% drop in India's 2026 gas use, led by fertilizers, undercuts the story that Asian LNG is a one-way supply squeeze.
India's fertilizer producers cut gas use by more than 0.4 billion cubic metres, or 7 per cent year-on-year, the steepest decline of any end use, even as the country's total gas demand is set to fall roughly 8 per cent in 2026, according to a report carried by The Hindu BusinessLine on Saturday (2026-07-11).6
The report names the trigger as the West Asia conflict and the closure of the Strait of Hormuz, which almost choked off half of India's LNG imports from the Middle East.6 Most of the market is watching the supply side of that story. India's demand is the harder number to explain away.
The IEA said on Friday (2026-05-15) that the Iran war had erased around 120 bcm of LNG supply for 2026-2030, about 15 per cent of expected global supply, with roughly 20 bcm lost since the conflict began on 28 February 2026 as shipping stalled through a chokepoint that once handled a fifth of the world's LNG, Montel reported.1 Asian buyers paid record spot prices, with cargoes quoted above $25/MMBtu after damage to Qatar's export infrastructure and the Hormuz blockade cut supply forecasts.5 Wood Mackenzie's base case still has Asian gas demand nearly doubling by 2050 to around 140 billion cubic feet per day.3
The India numbers cut against that. As recently as February 2026 the IEA projected the country's gas consumption reaching 103 bcm/yr by 2030, a nearly 7 per cent annual growth rate from 2023 that it called far in excess of most peers.6 An 8 per cent contraction in a single year is not a rounding error against a 7 per cent growth path. It is the fastest-growing large market in Asia going into reverse, in the year the LNG bulls were most confident about demand.6
The composition matters more than the headline. When a subsidy-supported, government-protected sector like fertilizers cuts gas burn despite its designation as critical to food security, price has broken through demand that policy was built to defend.6 Fertilizer plants that keep running through most price spikes do not idle unless the economics have genuinely snapped.
A third figure complicates the pure-scarcity read. India's LNG imports over the period totalled around 11 bcm, up 1 per cent year-on-year despite the West Asia supply disruption.6 Imports edged up while total demand fell 8 per cent.6 That points to demand destruction concentrated in domestically supplied, price-sensitive segments, not an import market physically starved of cargoes. The barrels arrived. The buyers, at these prices, did not want them.
The risk for bulls is treating high Asian LNG prices as evidence of durable demand rather than as the mechanism killing it. Asia's neighbours have already shown the substitution response, turning to coal as the Iran war squeezed LNG, the Associated Press reported on 2026-05-19.4 The IEA's Electricity 2026 report expects gas to keep growing in the power mix even as renewables and nuclear climb toward 50 per cent of global generation by the end of the decade.2 That forecast assumes gas stays affordable enough to win share, and India's fertilizer cuts are a live test of what happens when it does not.2
None of this makes the supply loss fake. Around 20 bcm of production is gone and Hormuz remains the binding constraint.1 But a supply-driven bull case and a demand-destruction bear case can both hold at once, and they settle at very different price levels. If the highest-growth buyer is rationing consumption rather than paying up, the ceiling on Asian LNG prices sits lower than a 140 bcf/d-by-2050 demand curve implies.3
What would confirm the bearish read is a second data point: whether India's fertilizer and industrial demand recovers once Hormuz reopens and spot prices fall back, or stays impaired because buyers have rewired around gas.6 The monthly import figures are the tell. If cargoes climb while domestic demand keeps sliding, the destruction has set in and the bulls are pricing a market that is shrinking where it counts. Watch the next fertilizer-sector consumption print, and whether the 1 per cent import gain holds or fades.6