IEA Projects 0.5% Decline in Global Gas Demand for 2026

Global natural gas consumption is projected to decline by 0.5%, or approximately 20 billion cubic meters, in 2026, the International Energy Agency (IEA) announced Tuesday in its third-quarter Gas Market Report. The agency attributes the expected drop to higher prices that are curbing demand from both industrial users and power generators. This would be the third annual decline in gas demand this decade, following decreases in 2020 and 2022.

The primary driver of the price surge is a tightening of supplies following the U.S.-Iran conflict, which has sharply reduced liquefied natural gas (LNG) flows through the Strait of Hormuz. The shipping route is a critical chokepoint, typically carrying about 20% of global LNG supplies. As a result, LNG output from Qatar and the United Arab Emirates fell by nearly 80% during the March-June period compared to the same four months in 2025.

The supply constraints have pushed benchmark prices to their highest average second-quarter levels since 2022. Europe’s TTF benchmark price increased 32% year-on-year to average nearly $16 per million British thermal units (mmBtu). In Asia, spot LNG prices rose 45% to an average of $17.5 per mmBtu, prompting a 1% drop in regional gas demand during the first half of 2026 as some power producers switched to coal.

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For the full year, the IEA anticipates that global LNG supply will remain broadly unchanged from 2025, as increased production in other parts of the world is expected to compensate for the disruptions in the Gulf. However, the agency cautioned that this outlook is contingent on regional stability. If the Strait of Hormuz is not fully reopened before the fourth quarter, the report noted that global LNG supply could record its first annual decline since 2012.