The International Energy Agency (IEA) reported that the war in the Middle East is reshaping global natural gas markets by tightening supply and keeping prices elevated. Global gas demand is expected to decline 0.5% in 2026, driven mainly by lower consumption in the power and industrial sectors, marking the third annual contraction in seven years.
Disruptions to LNG shipments through the Strait of Hormuz have contributed to market uncertainty, with traffic still below pre-conflict levels despite some recovery after a US-Iran agreement. Gas prices in Asia and Europe have eased from March highs but remain above 2025 levels. Reduced supply from Qatar and the UAE has been significant, though increased production from North America, Africa, and Australia is expected to offset some losses.
The IEA warned that prolonged disruptions could further tighten LNG markets through 2026 and 2027, delaying planned capacity growth and affecting global energy security. The conflict is also impacting other sectors, including fertilizer production, where higher gas costs could threaten food supply stability in vulnerable regions.
