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IEA Projects Gas Market Tightness in 2025 Amid Rising Demand and Slow Supply Growth

By Milcah   Tanimu

The International Energy Agency (IEA) predicts that global natural gas markets will remain tight in 2025. This is due to rising demand and slower supply growth. The forecast was shared in the IEA’s Gas Market Report, released on Tuesday.

Gas Demand Surges in 2024

The IEA reports that global gas demand rose by 2.8% or 115 billion cubic meters (bcm) in 2024. This increase surpassed the 2% average growth rate recorded between 2010 and 2020. The growth is driven by expanding markets in Asia.

Tight Market Conditions Expected to Persist

The IEA states: “Global natural gas markets are set to remain tight in 2025 as demand rises while supply grows more slowly than before the pandemic and energy crisis.”

Although markets began to stabilize in 2024, following the supply shock from Russia’s invasion of Ukraine in 2022, the global gas balance remains fragile. The IEA calls for more international cooperation to ensure gas supply security.

Supply Constraints and Extreme Weather Strain the Market

In 2024, gas demand surged, driven by growing markets in Asia. However, supply remained tight due to slower growth in liquefied natural gas (LNG) production. Extreme weather events also added strain to the market.

The IEA expects tight conditions to persist through 2025. New LNG export capacity, led by the United States and Qatar, is expected to ease this situation later in the decade. Geopolitical tensions continue to affect price volatility in gas markets.

Impact of Russian Gas Transit Halt on EU Security

While the halt of Russian gas transit through Ukraine on January 1, 2025, hasn’t immediately threatened EU energy security, the IEA warned it could increase Europe’s LNG import needs. This would tighten global market fundamentals. Moldova is particularly vulnerable and needs regional and international support to secure its energy supply.

Slower Growth in Global Gas Demand in 2025

The IEA expects global gas demand growth to slow to below 2% in 2025. Asia will continue to drive much of the demand. The agency emphasized that both producers and consumers must cooperate to enhance gas supply security.

Call for Greater Cooperation Between Producers and Consumers

Keisuke Sadamori, the IEA’s Director of Energy Markets and Security, stressed the need for stronger collaboration. Producers and consumers must work together to ensure secure gas supplies. He noted that while gas market fundamentals have improved, tightness persists due to rising demand and slow LNG capacity growth. Geopolitical risks add further uncertainty.

IEA’s New Working Party on Gas Security

To improve gas supply security, the IEA has set up a permanent working party on natural gas and sustainable gases security. This initiative aims to facilitate data sharing and promote dialogue between gas producers and consumers.

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