Global gas market: Between the Strait of Hormuz crisis and Europe's lowest reserves

Published on 11/03/2026 at 07:50 am EST

This document examines how a decade of structural change is reshaping global gas markets and helping importing countries in certain regions cope with the supply shock triggered by the current conflict in the Middle East. The report points out that the global gas market has changed considerably since the first publication of this report in 2016: it has become more flexible, more liquid and more interconnected, but also more complex. Middle East shock and LNG supply reorganization The rise in spot transactions and the growing share of liquefied natural gas (LNG) contracts without fixed destination clauses have strengthened the interconnection of regional markets and made them more resilient to supply disruptions. Despite these buffers, the crisis hit maritime flows head-on: the near-total interruption of LNG transit through the Strait of Hormuz, which reduced volumes loaded from Qatar and the United Arab Emirates by more than 60 billion cubic meters (Gm3) between March and October this year, sent prices in Asia and Europe to their highest levels since the 2022-2023 gas supply crisis. To address this major disruption, other sources of supply quickly stepped in. This sharp decline was partly offset by increased LNG production from new projects in North America and Africa, as well as by greater availability of feed gas from traditional producers in Africa, Asia and Russia. The document, which also incorporates the IEA's latest quarterly analysis of the gas market and updated short-term forecasts, anticipates a 3% decline in global LNG supply in 2026, equivalent to a drop of nearly 20 Gm3. Global demand under pressure from high prices Faced with soaring prices, consuming countries have had to adjust their usage, leading to a sharp slowdown in overall demand. The agency says global gas consumption declined during the first nine months of 2026, weighed down by demand destruction in the Middle East and by lower usage due to high prices in the main LNG-importing markets in Asia and Europe. Preliminary data indicate that global gas demand fell by more than 1%, or more than 35 Gm3 year over year between January and September, with the entire decline concentrated in the second and third quarters. "This decline is partly explained by lower consumption in the power generation sector, as surging gas prices encouraged a switch from gas to coal in many Asian markets. The sharp increase in natural gas prices also weighed on activity in energy- and gas-intensive industries, particularly fertilizer manufacturing," the IEA explains. Global gas demand is expected to decline by around 1.5%, or nearly 65 Gm3, as a result of demand destruction in the Middle East, declining industrial consumption in Europe and a switch from gas to coal for power generation in many Asian countries. A high-risk winter for Europe Beyond this decline in industrial consumption, the Old Continent is entering the cold season from a particularly fragile position. Europe is indeed beginning the winter heating season with its lowest natural gas storage levels in more than a decade, at their lowest since 2013. According to the report, this situation increases Europe's dependence on global LNG supplies to cover its winter consumption peaks. It leaves the region particularly vulnerable in the event of a colder-than-expected winter, technical outages or other delivery disruptions, risking prolonged tensions in gas markets through 2027. This European vulnerability will not be without consequences for the rest of the world. According to the report, weak European inventories, combined with limited storage capacity in LNG-importing countries in Asia and South America, could intensify competition for a limited number of flexible cargoes over the coming months. This will put upward pressure on spot prices, particularly during demand peaks. These very low storage levels in Europe could also significantly increase the volumes that need to be injected to replenish reserves throughout the summer of 2027, thereby maintaining acute tensions in the global market throughout the coming year. The imperative of stronger international cooperation Faced with such a precarious situation, relying solely on the market is no longer enough to secure energy supplies. These findings underscore the urgency of strengthening international cooperation on gas supply security, despite the increased flexibility of global markets. Over the past decade, the IEA has stepped up its initiatives in this area to help its member countries better prepare for potential supply crises, amid an increasingly uncertain geopolitical and trade environment.