The global liquefied natural gas industry remains confident that demand will continue to expand over the next decade despite ongoing geopolitical turmoil in the Middle East, Wood Mackenzie strategists said in a note on Thursday.
Wood Mackenzie analysts said that executives, traders, and financiers attending its fourth annual Gas and LNG Conference reinforced LNG's strategic importance to global energy security, even as market participants grapple with the risk of higher prices and supply disruptions.
Though there was little agreement on when tensions in the Middle East may ease, most delegates expected LNG prices to remain elevated over the next 18 months.
Wood Mackenzie said market tightness is being compounded by delays to major export projects and the absence of disrupted Qatari volumes.
"There remains a degree of complacency in current pricing," Wood Mackenzie analysts said, citing conference participants who argued that markets appear to be assuming Middle East exports will resume normally.
The consultancy said a prolonged disruption could trigger significantly higher prices ahead of the northern hemisphere winter of 2026/27.
The longer-term outlook remains overwhelmingly positive for the fuel. Wood Mackenzie projected that global LNG demand will increase by 60% to about 690 million metric tons per year by 2035 under a scenario in which the current conflict is resolved relatively quickly.
The industry's confidence stems partly from LNG's resilience during previous shocks, including the Covid-19 pandemic and Russia's invasion of Ukraine.
Wood Mackenzie said that participants said the latest crisis is accelerating a shift toward greater supply-chain resilience, including increased storage capacity, more flexible supply contracts, and expanded shipping fleets.
Meanwhile, a wave of new supply is also expected to reshape the market. Wood Mackenzie said that about 250 million tons of annual LNG export capacity is scheduled to come online over the next five years, raising expectations of oversupply and lower prices in the early 2030s.
The consultancy said that could prove critical for stimulating demand in emerging markets such as India, where affordability remains a key challenge.
China's role in the market is also evolving, Wood Mackenzie analysts said, citing participants. Rather than serving solely as the world's largest demand center, China is increasingly acting as a market balancer, reselling contracted LNG cargoes when prices rise and increasing purchases when prices weaken.
Supply diversification is emerging as a major theme amid concerns over reliance on the Middle East.
Wood Mackenzie said that though buyers are exploring alternatives, industry executives said it was too early to identify clear winners. The US remains attractive due to its scale, though some buyers expressed concern about concentration risk. Mozambique, Argentina, Canada and potentially Australia were cited as alternative sources of future supply.