LNG prices surge to multiyear highs as West Asia war squeezes supplies | Economy & Policy News

Taken together, prices of LNG — natural gas cooled to ultra-low temperatures to turn it into a liquid for sea transport — have soared to multiyear highs. The impact is felt globally, especially by Indian city gas utilities, as they will compete with Europe for supplies from America and West Africa, areas in proximity to Europe. For instance, the spread between Asian LNG benchmark JKM and European benchmark TTF halved to just $1 per million British thermal units (MMBtu) in August from previous months, highlighting increasingly fierce competition between Asia and Europe for flexible LNG cargoes, said Greg Molnar, a gas analyst at the Paris-based International Energy Agency, on LinkedIn.

The war in West Asia has sent prices of LNG soaring. Rates got dearer after the US and Iran re-engaged in hostilities after a lull in July, with the pricing tremors felt in India — IGL, India’s biggest city gas utility, took its biggest single-day hike for compressed natural gas (CNG), a transport fuel, a few days ago by increasing its price in Delhi by Rs 3.9/kg. Cumulatively, this brings IGL’s CNG price hike since the start of the year to Rs 9.9/kg — the highest among the CGD companies. “This is one of the most aggressive stances we have seen by IGL in recent times,” said Mumbai-based DAM Capital in a note. “The hike is also driven by the fact that IGL has seen the highest cost increase and consequently highest margin compression.”

In Europe, benchmark TTF month-ahead gas prices rose by almost 90 per cent year-on-year in August to an average of $21/MMBtu — their highest level since December 2023; in Asia, S&P Platts’ Japan Korea Marker (JKM) prices moved in tandem with TTF, rising 90 per cent on the year to an average of $22/MMBtu, Molnar said. The Argus-assessed prices for deliveries to west and east India for the first half of October stood at $25.34/MMBtu and $25.57/MMBtu, according to UK-based pricing agency Argus.

The ANEA, the Argus assessment for spot LNG deliveries to northeast Asia, for the front-half month was assessed at $25.83/MMBtu, exceeding the initial peak of $25.165/MMBtu recorded on March 19, right after Iranian attacks damaged nearly a fifth of Qatar’s 77 million tonnes a year LNG output capacity. Prices marked an almost four-year high as the front-half month ANEA was last assessed higher on December 30, 2022, at $26.1/MMBtu, Argus said. The second-half October ANEA was $25.78/MMBtu, and the second-half November assessment was $25.64/MMBtu.

“Qatar and the Emirates were effectively cut from global LNG trade for over 6 months now, leading to a cumulative LNG supply loss of more than 50 bcm through the March-August period, a decline equating to around half of China’s LNG imports in 2025,” Molnar said.

Qatar has declared force majeure on term LNG shipments until October/November for buyers including India’s Petronet LNG. Petronet and its promoters have a long-term contract for 8.5 million tonnes a year of LNG supplies, a third of overall LNG imports. Two of Ras Laffan’s LNG trains could take 3-5 years to resume exports, and the rest will start supplies once the Strait of Hormuz is ready for traffic, senior industry officials said.

The squeeze in West Asian supplies echoed in prices of LNG cargoes purchased by Indian importers. State-controlled gas distributor Gail may have purchased an October delivery at around $25.10-25.20/MMBtu, and another November delivery at around $24.90-25/MMBtu, likely on September 1, Argus cited traders as saying.

Cheap domestic gas from old fields accounts for only 40 per cent of CGD supplies, a senior industry official said. The rest comes from costly imported LNG, which shrinks margins and reduces the value of CNG compared to substitutes like petrol and diesel. Post this price hike, the difference versus petrol/diesel for IGL remains at Rs 15 and Rs 8, respectively — decent enough to drive CNG adoption, DAM Capital said. But anything higher would push motorists away from CNG, currently the highest-selling vehicles.

Despite the price increases, South Asian LNG importers, the most price-sensitive globally, have been accelerating imports. In South Asia, weekly shipments to India (0.8 mt, 11 cargoes) rose to their strongest since February, thanks to increased gas demand from the city gas and fertiliser sectors, market intelligence agency Vortexa said in a note. Bangladesh imported three cargoes (0.1 mt) after the country’s two FSRUs resumed operations earlier in August.

Indian imports of LNG rose by a remarkable 34 per cent year-on-year to nearly 2.5 million tonnes in August, according to data from market intelligence agency Kpler. Spot LNG averaged $13-$14/MMBtu in Asia in August 2025. City gas utilities and concerns in New Delhi over gas shortages have prompted higher imports, industry officials said.

The recent rally in LNG prices could just be the beginning, especially with the winter season approaching and Europe low on natural gas storage, analysts said. EU-wide gas storage fill ended last week at 65 per cent, trailing the five-year average by 17 percentage points, Vortexa said.

Hormuz remains the single most important uncertainty, while the ramp-up of new LNG projects might slow down in the coming months, thus offsetting less of the potential supply losses from Qatar and the Emirates, Molnar said. Marry that to a cold winter and a surge in European buying, and that pitches a price-sensitive Indian market against wealthier European buyers for the same molecules.