JKM Holds Near $21 as Gulf Attacks Test Asian LNG Supply Routes
Near-halted Hormuz tanker traffic has constrained supply, but a second consecutive year of falling Asian demand is capping the price response.
Escalating US-Iran military strikes and repeated attacks on Gulf tankers have effectively halted most LNG shipments through the Strait of Hormuz. Yet JKM spot sat at $20.98/MMBtu as of Monday (2026-07-20). The price sits between constrained Qatari supply on one side and the steepest slide in Asian LNG import volumes in years on the other.6
Wood Mackenzie now forecasts Asia Pacific LNG demand will fall for a second consecutive year, a sharp reversal from the growth trajectory that supported bullish JKM positions through 2025. The consultancy had previously expected demand to recover to 279 million tonnes by 2027, implying the current year ends well below that trajectory and below 2025 volumes.5,4
The conflict's supply impact is substantial. S&P Global estimated the effective Hormuz closure cut Gulf liquids production by roughly 15 million barrels per day at peak. Wood Mackenzie puts India's LNG shortfall alone at around 1.5 million tonnes per month. Alternative routing via the Red Sea and expanded ship-to-ship transfers east of Hormuz allowed Middle Eastern crude exports to rebound to over 10 million barrels per day by June (2026), S&P said, but LNG is harder to reroute at scale than crude.1,4
India lifted emergency natural gas supply curbs on July 4, 2026, after the government assessed that Hormuz shipments had resumed sufficiently to ease the immediate pressure. India had imported 27 million tonnes of LNG in FY25, of which 11.2 million tonnes came almost entirely from Ras Laffan in Qatar, creating concentrated exposure when the strait closed. S&P Global found imports fell only 5% through the disruption as diversified sourcing from Oman, the US, Nigeria and Angola absorbed most of the gap, with May volumes down just 2% year-on-year.3,1
China's position is structurally different. Chinese crude purchases fell 41% year-on-year in June to 7.12 million barrels per day, the lowest monthly reading since October 2016, as Gulf war disruptions cut Middle Eastern supply and weak domestic demand suppressed buying. The first US LNG cargo to reach a Chinese terminal since February 2025 arrived at Hainan but sat in bonded storage, meaning it could be held, traded or re-exported without clearing customs. Beijing's 15% tariff on US LNG keeps direct imports uneconomical. The cargo is physically present but commercially absent from Chinese demand.6
Shell, the world's largest LNG trader, had expected global trade to rise above the 422 million metric tonnes recorded in 2025. The company now warns that Hormuz disruptions could keep 2026 trade flat if flows do not normalise. Shell still projects global LNG demand rising around 65% by 2050, with Asia requiring approximately 300 million tonnes per year to meet total gas demand by that date, driven by data centre growth and coal displacement.2
High JKM prices are already triggering substitution. Analysts expect South Asian buyers to switch toward coal and domestic gas if spot prices hold at current levels, which would deepen the demand slide Wood Mackenzie is already forecasting. The supply case rests on conflict persistence: US forces struck civilian infrastructure in Iran through mid-July (2026-07-17), Tehran attacked a Kuwaiti power and desalination plant in the same period, and no de-escalation path has emerged.6,2
Equirus Securities flagged that as Europe legally phases out Russian LNG from 2027, discounted Russian cargoes seeking alternative destinations could add supply into Asian markets just as regional demand begins its projected recovery. Wood Mackenzie expects Asia Pacific demand to reach 297 million tonnes by 2028. Whether Chinese domestic gas appetite revives fast enough to absorb incremental Russian supply, or whether South Asian buyers rebuild Qatari exposure after the strait crisis, will determine the market's direction once the conflict moves past its current phase.4