IEA Forecasts Global Gas-Demand Decline After Hormuz LNG Shock
The International Energy Agency expects global natural-gas demand to decline in 2026 after the Middle East conflict disrupted LNG shipments through the Strait of Hormuz, creating a major supply shock and delaying an expected easing of global gas-market conditions.
In its Gas Market Report for the third quarter of 2026, published July 7, the IEA said the conflict significantly disrupted global gas-market balances. The disruption has increased price volatility and pushed back the anticipated market-balancing effect of a wave of new LNG supply.
The outlook comes as buyers in Asia face tighter supply and higher LNG prices. The IEA estimates that Asian natural-gas demand fell 0.5% year over year in the first half of 2026, equivalent to nearly 5 billion cubic meters. The figure is preliminary and covers the first six months of the year, rather than representing a final full-year result.
A major shipping route was disrupted
LNG flows through the Strait of Hormuz were disrupted after the conflict began at the end of February 2026. Before the disruption, the route carried almost 20% of global LNG supply, according to the IEA.
The strait connects Gulf exporters, including Qatar and the United Arab Emirates, with buyers in international markets. Disruption on a route of that scale affects the availability and pricing of LNG well beyond the immediate region, particularly in markets that rely on seaborne gas shipments.
The IEA said higher LNG prices are encouraging some switching from gas to coal in Asia. That response reflects the pressure created when gas becomes more expensive or less readily available, although the report’s forecast does not reduce the global demand outlook to a single cause. Tighter supply fundamentals and market responses also shape the projection.
The forecast depends on a reopening
The IEA’s full-year outlook is based on a defined recovery scenario. It assumes that the Strait of Hormuz fully reopens during the third quarter of 2026 and that operations at undamaged regional facilities are fully restored by early in the fourth quarter.
Under that scenario, LNG deliveries from Qatar and the UAE are expected to increase progressively from July through October. Those are forecast assumptions, not confirmation that the strait has reopened or that regional facilities have been fully restored.
The timing of that recovery is central to the market outlook. A slower reopening or a longer restoration period would leave the supply disruption in place for longer than assumed in the IEA’s forecast. The report identifies the reopening and restoration timetable as part of the conditions behind its projection.
New U.S. projects do not immediately rebalance the market
The longer-term supply picture includes additional U.S. LNG capacity. Three major U.S. LNG projects reached final investment decisions since March, a sign of continued investment in future supply.
Those decisions do not mean the projects are already producing or exporting gas. The IEA said the conflict has delayed the expected market-balancing effect of the broader global LNG supply wave, meaning new projects are not eliminating the near-term impact of the Hormuz disruption.
The agency also said 2026 gas supply is forecast to remain broadly unchanged from 2025 as producers in North America, Africa and Australia increase output. That additional production is part of the market’s response, but it has not been enough to prevent the IEA from forecasting a contraction in global gas demand this year.
The next major markers for the outlook are the assumed third-quarter reopening of the Strait of Hormuz, the restoration of undamaged regional facilities by early in the fourth quarter and the planned July-to-October increase in LNG deliveries from Qatar and the UAE.
Sources
- Executive summary – Gas Market Report, Q3-2026, International Energy Agency
- Gas Market Report, Q3-2026, International Energy Agency
- Global demand for natural gas expected to contract this year as tighter supply pushes up prices, International Energy Agency
- Middle East crisis disrupts international natural gas markets and delays global LNG supply wave, International Energy Agency
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