Paris, July 07 (QNA) - The International Energy Agency (IEA), Tuesday, forecasted that the global demand for gas will decline by 0.5 percent in 2026.

"The impacts of the war in the Middle East continue to reshape the global natural gas market, with tighter supply and elevated prices weighing on demand in key markets," the IEA's latest quarterly market report has said.

This would mark the third time demand has contracted on an annual basis in seven years, the IEA has noted.

Published today, the Q3 2026 Gas Market Report has examined how markets have responded to the major disruptions to gas shipments through the Strait of Hormuz, previously the conduit for roughly 20 percent of the global supply of liquefied natural gas (LNG). 

Initial data suggests that global demand for natural gas contracted in the first half of 2026 year-on-year. This appears to have been largely driven by a decline in demand in the Middle East amid tighter supply and damage to gas-intensive industries.

Gas demand has also softened in Asia amid higher prices and policy measures to reduce demand and to encourage fuel switching, particularly to coal in the power sector.

The Gas Market Report has noted, "If a full reopening of the Strait of Hormuz is delayed beyond the beginning of the fourth quarter of this year, it could trigger the first annual decline in global LNG supply since 2012."

The implications of the conflict for LNG supply are set to extend beyond 2026, according to the report, adding that markets could remain tighter than had been previously expected over the next two years.

The IEA has said that the new report also highlights the ways in which disruptions in the global gas market are feeding through to other parts of the energy sector and wider economy.

It has added that the conflict has profoundly affected global supply chains for fertilizers, for which natural gas serves as a key feedstock. This has significant implications for food supply security, especially in the world's most vulnerable regions. (QNA)