IEA says Iran war will keep the global natural gas market tight for two years

The recent Iran war is having far-reaching implications on the energy markets, with effects likely to be felt for years to come. The International Energy Agency (IEA) released a report highlighting the impact of the conflict on global natural gas supplies, particularly due to damage to liquefied natural gas (LNG) facilities in Qatar.

The ongoing conflict in the Middle East, now entering its second month, has led to disruptions in global natural gas supplies. The closure of the vital Strait of Hormuz has effectively cut off one-fifth of global oil and LNG supplies, causing a significant crisis in the energy sector. The IEA’s executive director, Fatih Birol, described the situation as the “biggest crisis in history” in a recent interview.

Iranian strikes on Ras Laffan Industrial City in Qatar, a key LNG export terminal, have resulted in a 17% reduction in LNG capacity. Qatar’s energy minister has indicated that it could take up to five years to repair the damage caused by the attacks. This disruption is expected to impact the medium-term outlook for global LNG supply growth, delaying the anticipated expansion wave by at least two years.

The IEA’s quarterly report forecasts short-term supply losses and slower capacity growth, leading to a cumulative loss of 120 billion cubic meters of LNG supply through 2030. While new liquefaction projects in other regions are expected to offset these losses over time, the agency warns that tight markets could persist through 2026 and 2027.

In addition to supply disruptions, the IEA also noted a decline in natural gas demand in March, partly attributed to higher commodity prices and demand-side policy measures. Several Asian countries are implementing measures to reduce the use of natural gas, which could further impact global gas demand in the coming years.

Overall, the implications of the Iran war on energy markets are significant and will likely shape the industry for years to come. It is essential for stakeholders to monitor developments closely and adapt to the changing landscape of the energy sector.

This article was edited by Aimee Picchi.