IEA Sees Global Natural Gas Demand Falling as LNG Supply Tightens
The IEA forecasts global natural gas demand will decline 0.5% in 2026 as LNG supply disruptions, higher prices and the ongoing effects of the Middle East conflict keep global gas markets under pressure.
(P&GJ) — Global natural gas demand is expected to decline 0.5% in 2026 as tighter LNG supplies, elevated prices and disruptions linked to the conflict in the Middle East weigh on consumption, according to the latest quarterly Gas Market Report from the International Energy Agency.
If realized, the decline would mark the third annual contraction in global natural gas demand in the past seven years, driven primarily by weaker consumption in the power generation and industrial sectors.
The IEA said disruptions to LNG shipments through the Strait of Hormuz—which previously handled about 20% of global LNG supply—have reshaped market fundamentals despite a partial recovery in tanker traffic following a mid-June U.S.-Iran agreement.
Although LNG carrier movements through the waterway have increased, volumes remain below pre-conflict levels and uncertainty continues to cloud the outlook for global trade flows. Natural gas prices in Europe and Asia have eased from peaks reached earlier this year but remain well above 2025 levels.
The report said global gas demand contracted during the first half of 2026, led by reduced consumption in the Middle East following supply disruptions and damage to gas-intensive industries. Higher prices and fuel-switching policies also reduced demand across Asia, particularly in the power sector where some utilities shifted toward coal.
The IEA estimates LNG production from Qatar and the United Arab Emirates fell nearly 80% during the March-June period compared with the same period in 2025. However, increased production from new LNG projects in North America, Africa and Australia is expected to offset much of those losses for the full year.
The agency cautioned that if the Strait of Hormuz is not fully reopened before the start of the fourth quarter, global LNG supply could post its first annual decline since 2012.
Damage to gas infrastructure, including Qatar's Ras Laffan liquefaction complex, is also expected to delay the country's planned LNG expansion, keeping global gas markets tighter through 2026 and 2027, according to the report.
Beyond LNG markets, the IEA said reduced natural gas availability has disrupted fertilizer production, creating additional risks for agricultural supply chains and food security in vulnerable regions.