Iran war to keep petrol market tight for two more years: IEA

[LONDON] The global natural petrol market is set to remain tight beyond 2026, as the ongoing conflict in the Middle East and damage to regional infrastructure continue to disrupt supply, said the International Energy Agency (IEA).

In a report published on Friday (Apr 24), the IEA said that the war has delayed a long-anticipated glut in liquefied natural gas (LNG), even as new capacity comes online. The effect of that expansion – driven largely by the US – is being pushed back “by at least two years”.

The outlook aligns with a warning from energy trader Vitol Group, which said that global supply could be affected till 2028. It cited damage to LNG facilities in Qatar in March and delays to new projects across the Middle East.

Now in its second month, the conflict shows no signs of easing, effectively choking off around a fifth of global oil and LNG supply.

Qatar has said that the Iranian strikes in March damaged about 17 per cent of its liquefaction capacity, with repairs potentially taking as long as five years.

The combined effect of near-term supply losses and slower capacity growth could result in a cumulative shortfall of around 120 billion cubic metres of LNG between 2026 and 2030, the IEA said. This estimate included delays to Qatar’s North Field East expansion project.

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For now, the demand has softened in key importing markets in response to higher prices, milder weather and policy efforts to curb consumption. Several Asian countries are turning to fuel switching and demand-side measures to limit petrol use amid the supply crunch.

“Demand response will be key to balancing the global gas market,” the IEA said. BLOOMBERG