BEIJING (dpa-AFX) - Global natural gas demand is anticipated to drop by 0.5 percent this year as the conflict in the Middle East continues to reshape the key natural gas markets, especially in Asia, according to the International Energy Agency's third-quarter gas market report. This fall would be the third drop in the commodity demand on an annual basis in seven years.
This projected fall in demand reflects lower natural gas consumption by the power and industrial sectors in the Middle East and Asia. Limited supply, damage to gas-intensive industries and power plants, and stoppage of normal functioning of manufacturing facilities in the Middle East have resulted in reduced demand for the commodity, the IEA said.
Natural gas demand has also softened in Asia as the major commodity consumers, India and China, opted to use their emergency commodity stockpiles, the report said. In addition, Asian countries switched to other fuels, especially to coal in the power sector, tapped new suppliers from the region other than the Middle East, annulled prior market restrictions on natural gas and related products, and others.
These unfavorable developments and measures undertaken by the governments have curbed the national gas consumption, which will ultimately result in reduced demand for the commodity.
Elevated natural gas prices have also forced the consumers to limit their purchases and consumption even if the companies, which operate in the regions other than the Middle East supplied the gas.
Natural gas prices in Asia and Europe have moderated from recent highs in March but remain well above 2025 levels, according to the IEA.
Traffic through the Strait of Hormuz, one of the major focus points of the Middle East conflict, previously the conduit for roughly 20% of the global supply of liquefied natural gas (LNG), has remained well below pre-conflict levels. This has created a major uncertainty for the commodity buyers and sellers.
For the full-year 2026, despite around 80% plunge in year-on-year LNG production in the four-month period to June, supply is forecast to remain unchanged from 2025 as producers in the other regions, including Africa, Australia, North America, and others, could boost output.
LNG supply, however, is projected to be tighter in 2026 and 2027 as the supply chain disruptions and damage to gas infrastructure in the Gulf countries continue to hurt the production.
Meanwhile in the U.S., natural gas consumption is forecast to rise by 3.1 Bcf/d, or 3 percent, from 2025 to 2027, according to a short-term energy outlook from the U.S. Energy Information Administration (EIA).
The persisting intense heat wave in the country is expected to lend its support to raise the commodity consumption for power generation to meet air conditioning and related cooling demand, the agency said.
The natural gas prices, however, are forecast to exhibit limited upward movement as the inventories are projected to remain above the five-year average, helped by increased commodity output.
EIA forecast U.S. working natural gas inventories to reach 3,966 billion cubic feet by the end of October, 5 percent above the five-year average. These projected increased inventories reflect increased natural gas output led by growth in the Permian region.
As the above average inventories are heading into winter, EIA expects the Henry Hub spot price to average $3.57 per million British thermal units in the fourth quarter of 2026, down 5 percent from the same quarter last year.
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