IEA Reports Middle East Conflict to Tighten Global Natural Gas Markets Through 2027

The International Energy Agency (IEA) has projected that the ongoing Middle East conflict will lead to sustained tightness in global natural gas markets through 2027. The closure of the Strait of Hormuz has removed nearly 20% of global liquefied natural gas (LNG) supply from the market, causing significant price volatility and supply disruptions.

Damage to LNG infrastructure in Qatar, notably at the Ras Laffan Industrial City, has reduced the country's LNG capacity by 17%. Repairs are expected to take up to five years, further delaying the anticipated global LNG expansion.

The IEA's quarterly report highlights that these disruptions are expected to delay projected supply growth and prolong tight markets through 2026 and 2027. The combined effect of short-term supply losses and slower capacity growth could result in a cumulative loss of approximately 120 billion cubic meters of LNG supply between 2026 and 2030.

In response to higher commodity prices and supply uncertainties, natural gas demand has declined in key importing markets. Several Asian countries are implementing fuel-switching and demand-side measures to limit gas use amid the crisis.

The IEA emphasizes the importance of strengthening global gas supply security through continued investment across the LNG value chain and enhanced international cooperation between producers and consumers. A diversified portfolio of long-term contracts is also recommended to mitigate price volatility during periods of disruption.