Global natural gas demand will fall about 0.5% in 2026 as higher prices push power generators and industry to cut back, the IEA said. Supply disruptions tied to the U.S.-Iran conflict have squeezed LNG flows through the Strait of Hormuz, and the agency warned that a prolonged closure could trigger the first annual decline in global LNG supply since 2012.
Global gas consumption will drop about 0.5% in 2026, the International Energy Agency said on Tuesday, as higher prices curb demand from power generators and industry after the U.S.-Iran conflict tightened supplies. The decline works out to around 20 billion cubic metres, marking the third annual drop this decade after 2020 and 2022, the agency said in its third-quarter 2026 Gas Market Report.
Higher prices push buyers to coal
The pullback is sharpest in Asia, where gas demand fell around 1% year-on-year in the first half of 2026 as higher natural gas prices encouraged fuel switching, particularly to coal in the power sector.
Europe's TTF price and Asia's Platts JKM benchmark both hit their highest average second-quarter prices since 2022. TTF rose 32% year-on-year to average nearly $16 per million British thermal units, while spot LNG prices in Asia increased 45% to an average of $17.5/mmBtu.
The Strait of Hormuz risk
Behind the squeeze is the U.S.-Iran conflict, which has sharply reduced LNG flows through the Strait of Hormuz, a route that typically carries about 20% of global LNG supplies. Supply from Qatar and the United Arab Emirates has fallen sharply, with output down almost 80% in the March-June period compared with the same four months in 2025.
For the full year, the IEA expects global LNG supply to be broadly unchanged from 2025 as production elsewhere offsets the Gulf disruptions. But if the Strait is not fully reopened before the fourth quarter begins, the report said, supply could record its first annual decline since 2012.
Source: BusinessLine
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