Iran War Conflict Triggers Systemic Gas Demand Destruction

The Iran war conflict is causing systemic gas demand destruction, according to Philip Mshelbila, secretary general of the Gas Exporting Countries Forum. Speaking at the Invest in African Energy conference in Paris, Mshelbila stated that more than 500 million barrels of crude and condensate have been knocked out of the global market since February.

The disruption is the largest energy supply crisis in modern history, with countries dependent on Gulf supplies switching to coal and accelerating their transition to renewables. Mshelbila warned that if the conflict persists, these short-term changes could become structural, potentially delaying or even preventing a predicted glut of natural gas by 2026.

African gas producers are missing an opportunity to fill the supply gap caused by Middle East outages and restricted shipping through the Strait of Hormuz. Mshelbila noted that African countries have excess capacity in LNG and pipeline gas, but they are not producing at full capacity. North American producers are instead capturing European and Asian gas markets.