Iran War Crisis Creates Systemic Demand Destruction in Natural Gas Market

The Iran war crisis has led to massive demand destruction in the natural gas market. Philip Mshelbila, secretary general of the Gas Exporting Countries Forum, said at the Invest in African Energy conference in Paris that governments' short-term measures to mitigate the crisis may become structural if the conflict persists.

According to Kpler data, more than 500 million barrels of crude and condensate have been knocked out of the global market since the Middle East crisis began at the end of February. This is the largest energy supply disruption in modern history, with countries dependent on Gulf supplies switching to burning coal and accelerating their switch to renewables.

Mshelbila warned that if the conflict lasts for six months, the world may not recover even after it ends. He stated that 2026 had been expected to be a pivotal year for the sector, with a tight global gas market flipping into oversupply. However, the conflict has disrupted this plan, and it is unclear whether the glut will ever come.

African gas producers are missing an opportunity to step in and fill the supply gap caused by Middle East outages, according to Mshelbila. He noted that African countries have excess capacity in both LNG and pipeline gas but are not producing at full capacity. As a result, North American producers are capturing the European and Asian gas markets.