IEA sees first global gas demand drop since 2022

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IEA sees gas demand falling

Highlights

Global gas demand is expected to fall 0.5% in 2026.
It would be the first annual decline since 2022.
High LNG prices are reducing demand in Asia and Europe.
LNG supply remains exposed to Middle East export risks.

The report says global gas demand will fall by 0.5% in 2026, with lower consumption in Asia, Europe, and the Middle East outweighing growth in some other regions. The drop reflects higher gas prices after the conflict effectively disrupted about a fifth of global LNG supply and pushed key price benchmarks in Europe and Asia sharply above pre-war levels.

Higher prices hit demand

Global gas demand contracted in the first half of 2026, led by lower consumption in major LNG-importing markets. Asia’s gas demand fell by an estimated 0.5%, or almost 5 billion cubic meters, compared with the same period last year, as high LNG prices encouraged demand-side measures and fuel switching. China’s gas demand dropped by an estimated 4% from March to June, while its LNG imports fell 12%, or 3 bcm.

Europe also used less gas. OECD Europe’s demand fell by around 0.5% in the first half, mainly because stronger renewable power output reduced gas use in electricity generation. For the full year, the IEA expects European gas demand to decline by more than 2%, while Asia is also forecast to fall 0.5%.

LNG supply remains exposed

The supply picture remains uncertain. The IEA said LNG flows through the Strait of Hormuz have increased since the United States and Iran reached an interim agreement in June, but volumes remain far below pre-conflict levels. Its forecast assumes the strait fully reopens in the third quarter and that undamaged facilities in the region return to normal operations early in the fourth quarter.

From March to June, LNG loadings from Qatar and the United Arab Emirates fell by 35 bcm from a year earlier. Non-Gulf LNG output rose by almost 18%, or about 27 bcm, helped by new projects in North America and Africa and better feedgas availability elsewhere. That offset around three-quarters of the Gulf decline, leaving global LNG production down 4%, or 8 bcm, over the period.

A tighter market with fewer buffers

The gas market is not facing a simple demand slowdown. It is adjusting to a supply shock that has raised prices, reduced imports, and changed fuel choices across major consuming regions.

The IEA expects demand in the Middle East to fall about 4% in 2026, the region’s first annual decline since 1993, as damaged facilities and lower gas-intensive industrial activity weigh on consumption. At the same time, Central and South America are expected to increase gas use by 3%, while Eurasian demand is projected to rise nearly 3% after colder winter weather.

The risk is that any delay in restoring Gulf LNG exports could turn a flat supply outlook into an outright decline. The IEA said global LNG supply from Qatar and the UAE is set to fall by about 45%, or 54 bcm, this year, though new projects in North America, Africa, and Australia are expected to add close to 50 bcm.

As we previously reported, U.S. gas exports gain ground in India as Gulf supplies falter.

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