Executive summary

Global gas and liquefied natural gas (LNG) markets have changed profoundly since the Global Gas Security Review was first published in 2016. Global LNG trade has grown by more than 60% over the past decade, driven largely by an unprecedented expansion of LNG liquefaction capacity in the United States. At the same time, global gas markets are now deeper and more liquid, supported by growing spot trading and a rising share of destination-flexible LNG contracts, particularly for volumes sourced from the United States. The growing flexibility of global LNG trade has strengthened the interconnectivity of regional gas markets, reflected by the strong correlation that has emerged between Asian spot LNG and European hub prices.

Geopolitical complexity has also grown over the past decade. The gas supply shock induced by Russia’s full-scale invasion of Ukraine in 2022 reduced piped gas deliveries to the European Union by 110 billion cubic metres (bcm) between 2021 and 2023, while repeated disruptions to trade flows through the Strait of Hormuz triggered by the war in the Middle East led to an unprecedented supply shock to LNG markets. These market shocks highlight the need to strengthen the architecture of global gas supply security through closer international cooperation. In addition, military operations are increasingly targeting natural gas infrastructure and heightening the risk of unplanned supply disruptions.

Against this backdrop, the IEA has expanded its work on natural gas and LNG supply security. Since launching the annual Global Gas Security Review in 2016, the IEA has strengthened its monitoring of global gas supply and demand, introducing quarterly assessments in 2021. It also responded swiftly to the 2022/23 energy crisis by providing clear guidance to policy makers in its 10-Point Plan to Reduce the European Union’s Reliance on Russian Natural Gas, published just one week after Russia’s invasion of Ukraine. In late 2024, the IEA established a permanent Working Party on Natural Gas and Sustainable Gases Security (GWP) under the Standing Group on Emergency Questions, which aims to facilitate data and information exchange among its members and to promote dialogue between producers and consumers. The GWP is currently preparing its first gas emergency tabletop exercise for 2027 to strengthen preparedness for potential gas security crises. In addition, the IEA has co-hosted the LNG Producer-Consumer Conference (LNGPCC) with Japan’s Ministry for Economy, Trade and Industry (METI) since 2023.

The current Middle East crisis has dealt a major shock to global gas and LNG markets. LNG loadings from Qatar and the United Arab Emirates (UAE) declined by over 60 bcm y-o-y from March to October. The steep decline was partly offset by higher LNG output from new projects in North America and Africa, as well as by the increased availability of feedgas supply from legacy producers in Africa, Asia and Russia. Non-Gulf LNG production grew by 14%, or more than 40 bcm y-o-y, between March and October, essentially offsetting two-thirds of the decline in Gulf LNG deliveries during this period. Altogether, global LNG production fell by 6%, or around 20 bcm y-o-y, over the March-to-October period. 

This forecast assumes trade flows through the Strait of Hormuz will remain largely disrupted at least until the end of the year. Under this assumption, global LNG supply is projected to decline by 3%, or almost 20 bcm, in 2026, the steepest annual decline on record.

The disruption to LNG flows through the Strait of Hormuz this year has pushed Asian spot LNG and European hub prices to their highest levels since the 2022/23 energy crisis. In Europe, TTF spot prices rose by almost 70% y-o-y to an average of close to USD 20 per million British thermal units (/MBtu) between March and October. Asian spot LNG prices followed a similar trajectory, rising by almost 80% y-o-y to an average of USD 21.5/MBtu during the same period. Between March and July, Asian spot LNG prices traded at a premium of USD 2/MBtu to European hub prices. The spread tightened to around USD 1/MBtu between August and October, indicating fiercer competition for flexible LNG cargoes ahead of the heating season. Oil-indexed LNG prices also gradually increased to an estimated USD 12-14/MBtu in the third quarter of 2026. The impact of higher oil prices is expected to become more pronounced in the fourth quarter, since oil prices typically feed through to gas contract price formulae with a lag of five to six months.

Global gas consumption declined over the first nine months of 2026, driven by demand destruction in the Middle East and reduced gas use due to higher prices in key LNG importing markets in Asia and Europe. Initial data suggest global gas demand fell by more than 1%, or over 35 bcm, y-o-y between January and September, with the decline concentrated entirely in the second and third quarters. The reduction was partly driven by lower gas consumption in the power sector as higher gas prices encouraged switching from gas to coal in many markets in Asia. The strong increase in natural gas prices also weighed on gas use in energy- and gas-intensive industries such as fertiliser production.

For the full year of 2026, global gas demand is expected to fall by around 1.5%, or close to 65 bcm, marking its third annual decline since 2020. The decline is forecast to be largely concentrated in the power, energy and industrial sectors, which together account for 90% of the decline.

The impact of the Middle East conflict on gas markets varies considerably across regions. Countries in the Middle East have been impacted most directly, with damage to local gas production and processing facilities leading to a sharp decline in the production rates of gas-intensive industries. Middle Eastern gas demand is expected to contract by around 10% in 2026, an unprecedented decline in the region’s consumption.

With tighter LNG supply availability weighing on demand, natural gas consumption in the Asia Pacific region is forecast to decline by 1.5% in 2026, with higher LNG prices supporting gas-to-coal switching in the power sector and lower operating rates across gas- and energy-intensive industries. In Europe, gas demand is set to fall by 3% for the year as high prices curb gas use in industry, along with lower gas burn in the power sector owing to higher renewables power output.

The conflict has had limited impact on regions with little or no reliance on LNG imports. In Africa, natural gas demand is projected to increase by close to 5% y-o-y, primarily driven by the power and energy sectors. Similarly, natural gas demand in Central and South America is forecast to increase, with lower hydropower output set to support stronger gas burn in the power sector. Gas demand in North America is forecast to grow by just over 0.5% as lower gas use in buildings is more than offset by stronger gas burn in the power sector, as well as in the energy sector amid the region’s expanding LNG liquefaction capacity. Natural gas demand in Eurasia is forecast to expand by around 1.5% in 2026, with colder winter temperatures in the first quarter supporting stronger gas use in buildings.

EU gas storage sites are entering the 2026/27 heating season with inventories at their lowest levels since 2013. This leaves a reduced buffer against supply disruptions for the European market and could further increase the region’s reliance on global LNG supplies to meet winter demand. Low European storage levels, combined with limited storage options in several LNG importing countries in Asia and South America, could intensify the competition for a scarce number of flexible LNG cargoes in the coming months and put upward pressure on spot prices, especially during periods of high demand.

IEA simulations indicate that EU gas storage levels could drop below 10% of working capacity by the end of March 2027, assuming colder-than-average weather conditions and continued disruption to LNG flows through the Strait of Hormuz. This would leave the European market particularly exposed to events, whether additional cold snaps, technical outages or other supply disruptions, since the rate at which gas can be withdrawn from storage sites tends to decline once fill levels fall below 30% of working capacity. Moreover, low storage levels would substantially increase the need for injections through summer 2027, potentially extending market tightness into the following year.

The share of destination-flexible LNG contracts has grown significantly over the past decade, from 29% in 2016 to more than 50% in 2025. This strong growth was largely driven by the rapid expansion of destination-flexible US LNG. Destination-free LNG is playing a crucial role in helping global markets adjust to the current supply shock induced by disrupted trade through the Strait of Hormuz. Asian buyers – among the most exposed to the disruption – have been able to double their imports of LNG from the Atlantic Basin y-o-y, primarily the United States, during the March-October period, helping offset the steep decline in LNG supplies from Qatar and the UAE. Without the contribution of flexible LNG supply, market adjustments would have been more difficult and could have led to more uneven supply disruptions, although current market tightness poses challenges for price-sensitive short-term buyers competing for available volumes.

In addition, the pricing terms of LNG contracts are becoming more diverse and increasingly reflect underlying market fundamentals. The share of gas-indexed and hybrid LNG contracts rose from around 30% in 2016 to 45% in 2025. These pricing terms provide a greater incentive for LNG trade flows to respond to price signals and therefore allow for a more efficient distribution of LNG as a commodity.

The market-easing effects of the unfolding wave of global LNG supply are set to be delayed. Cumulative LNG supply losses between 2026 and 2030 are estimated at 150 bcm, based on the combined effect of near-term supply disruptions and the medium-term implications of damage to gas infrastructure – including at the Ras Laffan site in Qatar, which is the world’s largest LNG liquefaction facility. The losses resulting from the Middle East conflict are equivalent to 15% of the new LNG supply that is set to be added globally over the 2026-2030 period. With the impact on supply growth set to be largely concentrated in 2026 and 2027, markets could remain tighter than previously anticipated. 

Recently approved LNG projects will add to global supplies later this decade. Since March 2026, four major gas liquefaction projects have reached final investment decisions, all located in North America. The decision on the CP2 Phase 2 liquefaction project is set to increase the facility’s peak production capacity to 40 bcm per year when commercial operations begin in the second half of 2030. Delfin LNG’s first floating LNG vessel, with capacity of 6 bcm per year, is set to start production in 2030, as is the 13 bcm per year Commonwealth LNG project. The LNG Canada Phase 2 project, with capacity of 19 bcm per year, reached a final investment decision in September 2026 and is expected to start operations in the early 2030s. These new LNG export projects can help enhance gas supply security and affordability over time.