(Bloomberg) -- Global demand for natural gas will hit an all-time high next year as competition for seaborne fuel intensifies between Asia and Europe, according to the International Energy Agency.
After a drop in imports this year, Europe will need more liquefied natural gas in 2025, tightening both the market and price spreads with Asia, the Paris-based agency said in a market report Thursday.
“Natural gas supply remains fundamentally tight, with uncertainties weighing on the 2025 outlook,” the IEA said.
The IEA’s forecast suggests another challenging year for Europe, where consumers are still struggling with elevated energy bills. While gas prices in the region have fallen significantly from crisis peaks in 2022, they are still higher than historic averages. Expanding geopolitical risks — from the war in Ukraine to escalating conflict in the Middle East — have underpinned prices and market volatility.
Gas consumption in Europe could decline by 2% this year compared with 2023, according to IEA forecasts. Industrial demand has recovered but remains below pre-crisis levels, while gas usage in the power sector continues to decline as renewable energy booms.
In 2025, the continent’s demand may increase by 1%, the IEA said. If Russian gas flows via Ukraine are halted next year — the IEA’s base-case scenario as a fuel-transit agreement between Moscow and Kyiv expires at the end of December — then Europe will require more LNG.
Overall, global gas consumption will climb to a record this year, before expanding further in 2025, according to the IEA. Asia will remain the main driver of growth.
--With assistance from Anna Shiryaevskaya.
©2024 Bloomberg L.P.
