A surge in liquefied natural gas supply is expected to play a key role in rebalancing global gas markets in 2026, leading to stronger demand growth after a slowdown last year, according to the International Energy Agency (IEA) latest quarterly Gas Market Report.

The report finds that global gas demand growth slowed markedly to less than 1 per cent in 2025 following a relatively strong increase in 2024.

Tighter gas supplies in the first half of 2025 resulted in higher spot prices. These, along with weaker industrial activity, weighed on gas consumption, particularly in Asia.

The supply situation began to ease from mid-2025 as global production of liquefied natural gas (LNG) accelerated.

Global LNG supply rose by almost 7 per cent in 2025, with around three-quarters of this growth concentrated in the second half of the year.

New LNG capacity coming online in North America was by far the largest driver of the global increase, pushing global LNG supply into double-digit growth in the second half of 2025 and contributing to falling spot prices in both Europe and Asia.

The growing share of destination-flexible LNG also strengthened links between regional markets, with price correlations reaching new highs.

At the same time, geopolitical and policy shifts continued, with implications for international gas flows. Notable developments included the introduction of further market reforms across Asia and a landmark decision by the European Union to phase out Russian natural gas imports by November 2027 at the latest.

 Natural gas prices displayed strong volatility across Asia, Europe and North America in January 2026 amid adverse weather effects and geopolitical tensions.

Investment momentum in global LNG supply remained strong in 2025, according to the report, with more than 90 billion cubic metres (bcm) per year of LNG liquefaction capacity reaching final investment decision. This was the second highest annual amount on record after 2019.

The US led the new investment wave, accounting for over 80 bcm of approved annual capacity, reinforcing its position as the world’s largest LNG supplier.

The project development was accompanied by record LNG contracting activity, signalling continued confidence in the long-term role of LNG in global gas markets.

Global LNG supply growth is expected to accelerate further in 2026 to more than 7 per cent, its fastest pace since 2019.

North America is set to account for the vast majority of the 40 bcm increase.

The rise in supply is expected to lead to stronger global gas demand growth of nearly 2 per cent in 2026, driven primarily by China and emerging Asian markets.

“The unfolding LNG wave is set to have a central role in shaping global gas markets in the coming years, likely putting downward pressure on prices and improving liquidity as regional gas markets become increasingly interconnected,” said IEA Director of Energy Markets and Security Keisuke Sadamori. “Nevertheless, a range of risk factors remain – including geopolitical tensions and weather conditions – as the volatility in natural gas markets in early 2026 has highlighted. In these uncertain times, continued vigilance on energy security is essential, and the IEA is supporting countries around the world on this critical priority.” -TradeArabia News Service