Liquefied natural gas prices in Asia have surged dramatically, with the Japan-Korea Marker benchmark reaching $31 per million British thermal units this month, up from approximately $9 per mmBtu at the beginning of the year. The sharp increase reflects the impact of a conflict in the Persian Gulf that has removed one of the world’s three leading LNG exporters from the market.
The International Energy Agency estimates that regional warfare has resulted in 60 billion cubic meters of LNG supply losses over an eight-month period through October. Though increased production in the United States and Africa has offset roughly two-thirds of that gap, a significant shortfall remains. The IEA projects global LNG production will decline by 3% this year, representing the steepest annual drop since records began, with output falling 6% during the March-October period.
Underlying the supply crunch is mounting demand driven by the expansion of data centers supporting artificial intelligence initiatives across the technology sector. Natural gas has emerged as the primary energy source for these facilities, as renewable alternatives like wind and solar cannot reliably meet their power requirements even when paired with battery storage. Shell forecasts LNG demand will surge 65% between this year and 2050, despite current supply disruptions.
Industry participants have adapted by ramping up production at existing facilities and developing additional capacity previously viewed as potentially surplus. Qatar’s state energy company has secured long-term supply agreements with U.S. LNG producers, positioning itself as a major buyer of American liquefied gas even as it maintains a force majeure on its own domestic exports. While energy markets historically show demand dampening in response to price spikes, global gas consumption declined only 1% during the first nine months of the year, suggesting relatively inelastic demand patterns will sustain the market through the supply shortage.
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