Global demand for natural gas is set to reach an all-time high next year, with competition for seaborne fuel intensifying between Asia and Europe, according to a new report by the International Energy Agency (IEA), Bloomberg reports.
The Paris-based agency forecasts that Europe, after experiencing a drop in imports this year, will require more liquefied natural gas (LNG) in 2025, leading to tighter market conditions and increased price spreads with Asia.
“Natural gas supply remains fundamentally tight, with uncertainties weighing on the 2025 outlook,” the IEA said in the report.
The forecast paints a challenging picture for Europe, where consumers continue to grapple with high energy bills. Although gas prices in the region have significantly decreased from their 2022 crisis peaks, they remain above historical averages. Furthermore, expanding geopolitical risks, including the war in Ukraine and escalating conflict in the Middle East, have contributed to price volatility and market uncertainty.
The IEA predicts a 2% decline in gas consumption in Europe this year compared to 2023. While industrial demand has recovered, it remains below pre-crisis levels, and gas usage in the power sector continues to decrease as renewable energy sources gain traction.
However, the agency anticipates a 1% increase in demand on the continent in 2025. If Russia halts gas flows through Ukraine next year, as per the IEA’s base-case scenario, Europe would require even more LNG, given that the current fuel-transit agreement between Moscow and Kyiv expires at the end of December.
Overall, global gas consumption is expected to reach record levels this year, with further expansion anticipated in 2025. Asia is predicted to remain the primary driver of growth in gas demand.
