The International Energy Agency (IEA) expects global natural gas consumption to fall by 0.5% in 2026, a reduction of about 20 billion cubic metres for the year, according to its third-quarter 2026 Gas Market Report. The agency attributes the projected decline largely to higher prices that have curbed demand among power generators and industrial users after supplies were tightened by the U.S.-Iran conflict.
The IEA noted this would be the third annual decline in global gas demand this decade, following drops recorded in 2020 and 2022. Analysts at the agency point to price-sensitive sectors as the principal drivers of the downturn, with utilities and heavy industry trimming consumption in response to the market environment.
Regionally, gas consumption in Asia eased by about 1% year-on-year in the first half of 2026. The report said higher prices in the region encouraged switching to cheaper alternatives, most notably coal within the power sector, contributing to the reduction in gas use.
Price movements have been pronounced. Europe’s benchmark TTF average for the second quarter rose 32% compared with the same period in the prior year, reaching almost $16 per million British thermal units (mmBtu). In Asia, spot LNG prices tracked by the Platts JKM benchmark climbed 45% year-on-year to an average of $17.5 per mmBtu in the second quarter.
The IEA highlighted a sharp drop in liquefied natural gas flows through the Strait of Hormuz following the U.S.-Iran conflict. The strait is an important shipping corridor that typically carries about 20% of global LNG supplies, and the disruption has been a central factor tightening availability.
For the full year, the IEA currently expects global LNG supply to remain broadly unchanged from 2025, as increased output in regions outside the Gulf has helped offset the disruptions. However, the report warns that if the Strait of Hormuz is not fully reopened before the start of the fourth quarter, global LNG supply could post an annual decline for 2026 - the first such decrease since 2012.
The agency also documented very steep reductions in output from specific Gulf producers. LNG supply from Qatar and the United Arab Emirates fell sharply, with production down almost 80% in the March-June period compared with the same four months in 2025.
The IEA’s findings underline the sensitivity of gas markets to both price movements and chokepoint disruptions, with consequences for gas-fired power generation, industrial demand and global LNG trade flows.