By Barbara Nwaiwu
The global natural gas market outlook has been significantly altered by the conflict in the Middle East, with a major supply shock disrupting market fundamentals and delaying an expected wave of liquefied natural gas (LNG) supply.
The International Energy Agency (IEA) said the disruption to shipping through the Strait of Hormuz since the start of March has created unprecedented uncertainty, removing close to 20 percent of global LNG supply from the market.
It noted that the crisis triggered sharp price increases across key importing regions, with natural gas prices in Asia and Europe rising to their highest levels since January 2023 during a period of intense volatility.
The report added that global LNG production declined by about 8 percent year-on-year, as exports from major producers were only partially offset by increased output from other regions.
According to the IEA, the crisis has also reversed earlier expectations of market rebalancing, pushing back the anticipated LNG supply expansion wave by at least two years due to infrastructure damage and ongoing disruptions.
The agency warned that natural gas demand has weakened in key importing markets due to higher prices, milder weather conditions, and policy measures aimed at reducing gas consumption.
It further stated that while new LNG projects are expected to come online in the coming years, the current disruptions will continue to keep global gas markets tight through 2026 and 2027
