Middle East Conflict Disrupts Global Natural Gas Markets

The Middle East conflict has caused significant disruptions to global natural gas markets, according to Dr. Fatih Birol, Executive Director of the International Energy Agency (IEA). The crisis has led to a decline in LNG exports from Qatar and the United Arab Emirates, with loadings falling by around 35 billion cubic meters between March and June compared to the same period last year.

While some of this loss was offset by additional LNG production from new projects in North America and Africa, global LNG production still declined by around 4% over the period. The IEA assumes that LNG exports will gradually recover, with operations returning to full capacity by the start of the fourth quarter.

This could lead to a flat global LNG supply in 2026, but any delays to this recovery could result in the first annual decline in global LNG supply since 2012. As a result, global natural gas demand is expected to decline in 2026 due to lower demand in the Middle East and Asia.

The crisis has highlighted the importance of supply diversification and the need for governments to balance short-term emergency measures with long-term investments in supply resilience. Dr. Birol notes that there are no hard and fast rules on how to achieve this, but emphasizes the importance of ensuring that short-term measures do not compromise long-term goals.

The IEA suggests that countries can strengthen the architecture of global gas supply security by diversifying their supply routes, balancing long-term contracts with reliance on short-term markets, building flexibility and optionality into the system, investing in regasification capacity, and promoting international cooperation on gas supply security.