Key facts
- The Iran conflict has led to the closure of the Strait of Hormuz, removing 21% of global LNG from the market.
- Asian spot LNG prices increased by 51% by March 9, 2026, due to the conflict.
- Attacks on Iran and Qatar's gas facilities on March 18, 2026, caused extensive damage to liquefaction plants.
- Thailand relies on gas for 66% of its power output, with LNG imports making up 27% of its gas requirements.
- The cost of LNG cargoes for Thailand has risen significantly, exacerbated by a 5.3% depreciation of the Thai Baht in March 2026.
- Thailand is exploring cheaper energy options, including restarting coal power and increasing hydroelectricity output.
Thailand is experiencing significant macroeconomic fallout from the Iran conflict, which has disrupted global liquefied natural gas (LNG) markets and driven up prices. The conflict effectively closed the Strait of Hormuz, removing 21% of global LNG supply. Asian spot prices jumped 51% by March 9, 2026, while oil-indexed deliveries rose 35%.
Further exacerbating the situation, attacks on Iran's largest gas field and Qatar's main liquefaction plant on March 18, 2026, caused extensive damage to QatarEnergy's facilities, which are responsible for over 3% of global LNG supply. Repairs are expected to take three to five years, potentially delaying expansion projects by a year and exerting sustained upward pressure on LNG prices.
This supply shortage is particularly concerning for Thailand, which relies on gas for 66% of its power output. LNG imports constitute 27% of its gas requirements, and 28% of these deliveries pass through the Persian Gulf. The country spends over 7% of its GDP on oil and gas imports, a figure likely to increase as Thailand reportedly pays upwards of USD23 per MMBtu for replacement cargoes, compared to USD11 per MMBtu before the conflict.
Currency depreciation has worsened affordability challenges. Following a 5.3% depreciation of the Thai Baht in March 2026, the cost of purchasing an LNG cargo has increased by 125% in local currency terms, according to IEEFA.