The ongoing Middle East conflict, specifically the disruption to the Strait of Hormuz, has significantly impacted global liquefied natural gas (LNG) supplies, leading to a surge in prices and an energy crunch for Asian nations, particularly Pakistan and Bangladesh. Qatar, a major supplier, canceled scheduled deliveries in March following an Iranian attack and has delayed restoring output, forcing these countries to purchase costly spot shipments. Pakistan LNG Ltd. recently bought a late July shipment at approximately $21.88 per million British thermal units, the highest price seen since 2022. Bangladesh's state-run buyer also secured an elevated August shipment.
This crisis has strained government finances in Pakistan and Bangladesh, prompting them to consider raising electricity and gas tariffs. The spot shipments are roughly double the cost of their long-term supply contracts with Qatar. The prolonged disruption to the Strait of Hormuz, a critical conduit for about one-fifth of global LNG supplies, has sent spot prices soaring, with no LNG carrier transits reported since July 11 and an estimated 17% of Qatar's LNG export capacity reportedly destroyed, with repairs potentially taking up to five years.
In response, both Pakistan and Bangladesh are accelerating efforts to reduce reliance on imported LNG. Bangladesh is rapidly expanding its renewable energy sector, with tax exemptions for solar power through 2035 and a goal to reach 10 gigawatts of installed solar capacity by 2030, up from about 1.7 gigawatts in 2024. Pakistan is also pivoting to nuclear, coal, and renewables; nuclear generation increased 30% in June year-over-year, and coal generation rose 5%. Imports of solar panels and cells from China into Pakistan also saw a 40% increase in the first half of 2026 compared to the previous year.
