Colombia is grappling with a severe energy crisis as natural gas supply dwindles amid rising demand and geopolitical tensions. The closure of the Strait of Hormuz following U.S. strikes on Iran has exacerbated an already precarious situation, forcing Colombia to rely on costly liquefied natural gas (LNG) imports. Domestic production is in decline, with March 2026 output falling nearly 15% year-over-year, highlighting a troubling trend that has seen natural gas reserves drop to their lowest levels in over two decades.
This crisis is significant for financial markets as it threatens to drive up energy costs and inflation in Colombia, where natural gas is vital for both industrial use and household consumption. The shift from coal to natural gas for electricity generation, particularly during El Niño-induced droughts, further strains the already limited supply. With rising LNG prices—up 26% recently—Colombia’s economy, already burdened by debt and fiscal deficits, faces additional pressure.
Market professionals should closely monitor Colombia’s energy landscape, as the increasing dependence on expensive LNG imports could lead to higher operational costs for industries and a spike in living costs for consumers, potentially stoking inflation and impacting overall economic growth.
Source: oilprice.com