LNG Price Hike: Pakistan, Bangladesh forced to buy expensive LNG as West Asia war disrupts supplies; here’s why

The ongoing US-Iran war is affecting not only the Middle East but also countries like Pakistan and Bangladesh. As fighting continues and the Hormuz Strait remains disrupted, both countries are paying much higher prices for liquefied natural gas (LNG).

Pakistan and Bangladesh depend heavily on imported oil and gas. With supplies becoming difficult, both countries are now facing higher fuel costs and more pressure on their economies.

Why are Pakistan and Bangladesh paying more for LNG?

Pakistan and Bangladesh import most of their oil and natural gas from the Middle East. Much of this fuel passes through the Hormuz Strait, one of the world’s busiest shipping routes for oil and gas.

Because of the US-Iran conflict, the movement of ships has been affected. As a result, LNG supply has become limited and prices have increased around the world.

Pakistan buys its most expensive LNG in years

According to a Bloomberg report, Pakistan’s state-owned company Pakistan LNG Ltd bought an LNG cargo earlier this week for $21.88 per million British thermal units (MMBtu).

The cargo will arrive at the end of July. The report said this is the highest LNG price Pakistan has paid since 2022.

Bangladesh is also paying higher prices

Bangladesh is facing the same problem. The country’s state-owned energy companies have also bought at least one LNG cargo for August at a much higher price.

The rising cost of fuel is expected to increase the country’s import bill and put more pressure on its economy.

Why is the Hormuz Strait so important?

The Hormuz Strait is one of the world’s most important sea routes for oil and gas. Around 20% of the world’s oil and LNG passes through this route.

When ships cannot move freely through the strait, global energy supplies become tighter. This pushes up oil and LNG prices, especially for countries that depend on imports.

Qatar’s earlier supply cut made things worse

Earlier, during the previous phase of tensions in the Middle East, Qatar, one of the biggest LNG suppliers to Pakistan and Bangladesh, temporarily stopped supplies from some export plants and cancelled some spot LNG deals.

This reduced the supply of LNG in the market. Now, with the US-Iran war affecting shipping again, Pakistan and Bangladesh are once again paying much higher prices for fuel.

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