PARIS, (Pakistan Point News - 08th Jul, 2026) World’s gas consumption is forecast to drop for the third time in seven years, even as LNG supply from producers in other regions helps offset losses in the middle East.
The impacts of the war in the Middle East continue to reshape the global natural gas market, with tighter supply and elevated prices weighing on demand in key markets, according to the IEA’s latest quarterly market report.
Global gas demand is expected to decline by 0.5% this year, the report forecasts, due primarily to lower gas use in the power and industrial sectors. This would mark the third time demand has contracted on an annual basis in seven years.
The Gas Market Report for the third quarter, published today, examines how markets have responded to the major disruptions to gas shipments through the Strait of Hormuz, previously the conduit for roughly 20% of the global supply of liquefied natural gas (LNG).
While the transit of LNG carriers through the Strait has been on the rise since the United States and Iran reached an interim agreement in mid-June to end hostilities and reopen the Strait, traffic remains well below pre-conflict levels and significant uncertainty surrounds the outlook for future trade flows. Natural gas prices in Asia and Europe have moderated from recent highs in March but remain well above 2025 levels.
Initial data suggests that global demand for natural gas contracted in the first half of 2026 year-on-year. This appears to have been largely driven by a decline in demand in the Middle East amid tighter supply and damage to gas-intensive industries. Gas demand has also softened in Asia amid higher prices and policy measures to reduce demand and to encourage fuel switching, particularly to coal in the power sector.
For the full year of 2026, supply is forecast to be largely unchanged from 2025 as producers in other regions boost output – including from new LNG projects in North America, Africa and Australia. At the same time, if a full reopening of the Strait of Hormuz is delayed beyond the beginning of the fourth quarter of this year, it could trigger the first annual decline in global LNG supply since 2012.
The implications of the conflict for LNG supply are set to extend beyond 2026, according to the report. Before the outbreak of the war at the end of February, the global gas market balance had been easing since the second half of 2025 as new LNG supply facilities came online.
However, near-term supply disruptions and damage to gas infrastructure – including to Qatar’s Ras Laffan, the world’s largest liquefaction site – are expected to set back Qatar’s planned LNG capacity expansion. The impacts on projected supply growth are set to be largely concentrated in 2026 and 2027, which means markets could remain tighter than had been previously expected over the next two years.
The new report also highlights the ways in which disruptions in the global gas market are feeding through to other parts of the energy sector and wider economy. For example, the conflict has profoundly affected global supply chains for fertilisers, for which natural gas serves as a key feedstock. This has significant implications for food supply security, especially in the world’s most vulnerable regions.
