Global natural gas demand is expected to fall by 0.5% in 2026 as geopolitical tensions tighten LNG supply, keeping prices elevated and weighing on consumption across key markets.
Natural gas demand is set to decline by 0.5% worldwide in 2026
Global natural gas demand is expected to decline by 0.5% in 2026, according to the latest quarterly Gas Market Report released by the International Energy Agency (IEA). The downturn is primarily driven by lower gas consumption in industry and the power sector. If confirmed, 2026 would mark the third year-on-year decline in global gas demand in the past seven years.
The IEA expects global gas consumption to contract for the third time in seven years, although additional LNG supplies from producers outside the Middle East should partly offset losses caused by lower regional production. The effects of the war will continue to reshape the global natural gas market throughout 2026, tightening supply and keeping prices high, with demand under pressure across major consuming regions.
The Middle East conflict has deeply disrupted the global natural gas market
The IEA’s third-quarter 2026 Gas Market Report assesses how global markets have responded to the major disruption of gas shipments through the Strait of Hormuz, which handled around 20% of global liquefied natural gas (LNG) supplies before the conflict that began in February. The report reviews market developments during the first half of 2026 and provides an outlook for the remainder of the year.
According to the report, the conflict has had profound and far-reaching consequences for the global natural gas market. It has placed global supply balances under significant pressure, while damage to regional export infrastructure has altered medium-term market expectations.
Although LNG tanker traffic through the Strait has gradually increased since the United States and Iran reached a preliminary agreement in mid-June to end hostilities and reopen the waterway, shipping volumes remain well below pre-conflict levels. Considerable uncertainty also persists regarding future trade flows. Natural gas prices in both Asia and Europe have retreated from the peaks recorded in March but remain substantially higher than in 2025.
IEA data indicate that global natural gas demand contracted during the first half of 2026 compared with the same period a year earlier. The decline reflects weaker demand in the Middle East, where tighter supply and damage to gas-intensive industries have reduced consumption. Demand also softened across Asia as higher prices and government policies encouraged lower gas use and greater fuel switching, particularly from natural gas to coal in the power sector.
LNG supply remains under pressure despite production growth elsewhere
According to the report, LNG supply from Qatar and the United Arab Emirates fell sharply, with production declining by nearly 80% between March and June compared with the same period in 2025. However, total global LNG supply is expected to remain broadly unchanged over the full year, supported by higher production in other regions and new LNG projects in North America, Africa and Australia.
Nevertheless, the report warns that if the full reopening of the Strait of Hormuz is delayed beyond the beginning of the fourth quarter of 2026, the world could experience its first annual decline in global LNG supply since 2012.
The impact of the Middle East conflict on LNG availability is also expected to extend beyond 2026. Short-term supply disruptions and damage to gas infrastructure, including facilities at Ras Laffan in Qatar, the world’s largest LNG liquefaction complex, are likely to slow the country’s planned expansion of LNG production capacity. As a result, supply constraints are expected to persist throughout 2026 and 2027, leaving global gas markets tighter than previously anticipated.
Geopolitical tensions and climate risks continue to threaten LNG trade
“The conflict in the Gulf has damaged LNG infrastructure, clouded the outlook for the region’s expansion projects, and exposed Asian buyers to uncertainty over supply flows and higher prices,” said Andrea Stegher, President of the International Gas Union (IGU).
The Strait of Hormuz remains the world’s most critical maritime chokepoint for LNG shipments. However, the IGU’s 2026 World LNG Report highlights that supply risks are not confined to this corridor, as several other strategic shipping routes remain vulnerable to geopolitical tensions and, in some cases, climate-related disruptions.
Traffic through the Bab el-Mandeb Strait, which links the Gulf of Aden with the Mediterranean via the Red Sea, has yet to return to normal because of continued security incidents linked to Houthi attacks. The Panama Canal, another key route for US LNG cargoes destined for Asian markets, has also demonstrated its vulnerability. In this case, disruptions have been driven by climate rather than geopolitics, particularly the severe drought that affected Gatún Lake in 2023 and restricted vessel transits.
Beyond these major chokepoints, incidents involving LNG carriers in open waters, including attacks reported in recent years, underline the growing exposure of global LNG trade flows to security-related risks.
