IEA Forecasts Global Gas Demand Drop Amid Middle East Conflict

The International Energy Agency forecasts that global natural gas demand will fall by 0.5%, or approximately 20 billion cubic metres, in 2026. This contraction marks the third decline in seven years, driven by high prices that have pushed power generators and industrial users in Asia and the Middle East to reduce consumption or switch to coal.

Market volatility stems from a war between the United States and Iran that began in late February 2026. The conflict damaged critical infrastructure, including Qatar's Ras Laffan liquefaction site, and severely disrupted liquefied natural gas flows through the Strait of Hormuz. Between March and June 2026, LNG output from Qatar and the United Arab Emirates dropped nearly 80% compared to the previous year.

Although the United States and Iran reached an interim agreement in mid-June to end hostilities and reopen the Strait of Hormuz, shipping traffic remains below pre-conflict levels. Shell reports that these disruptions shut in approximately one-fifth of global monthly LNG supply, though the company projects that global LNG demand will increase by 65% by 2050.

While production increases in North America, Africa, and Australia are currently offsetting regional losses, the IEA warns that a failure to fully reopen the Strait before the fourth quarter could lead to the first annual global LNG supply decline since 2012. Such a decline would threaten global fertilizer supply chains and food security.