WASHINGTON: The United States is entering a period of structurally higher industrial natural gas demand, with consumption expected to remain at record levels through at least 2027, even as the Iran war intensifies disruptions across global oil markets and tightens energy supplies worldwide.
According to the latest Short-Term Energy Outlook (STEO) from the US Energy Information Administration (EIA), industrial natural gas consumption in the United States averaged a record 23.6 billion cubic feet per day (bcfd) in 2025, exceeding the previous high of 23.4bcfd recorded in 2023.
The projections suggest that rising industrial demand is no longer merely cyclical, but increasingly tied to deeper structural shifts in manufacturing, energy trade flows and global supply-chain realignment.
The EIA expects industrial gas consumption to rise by another 1.2 per cent, or 0.3bcfd, in 2026, followed by an additional 1.7pc increase, or 0.4bcfd, in 2027.
At the centre of the trend is sustained expansion in energy-intensive manufacturing sectors, including petrochemicals, fertilizers, metals processing and export-oriented industrial production. These industries continue to benefit from the United States’ relative energy cost advantage compared with Europe and parts of Asia, where fuel prices remain significantly higher.
However, the pace of growth is being moderated by ongoing efficiency improvements across industrial operations.
“Continued efficiency improvements reduce the amount of natural gas needed per unit of output,” the EIA noted, indicating that overall demand growth would likely have been substantially higher without technological gains in industrial energy use.
Iran war intensifies pressure on global oil markets
The revised US energy outlook comes amid escalating geopolitical tensions in the Middle East, where the Iran war has evolved into one of the most significant threats to global energy security in recent years.
The EIA this week sharply revised its assumptions for global oil supply disruptions, warning that interruptions to Middle Eastern exports are likely to be both deeper and more prolonged than previously anticipated.
Central to the disruption is the Strait of Hormuz, the world’s most strategically important oil transit chokepoint, through which roughly one-fifth of globally traded crude oil normally passes.
The agency now assumes the strait will remain effectively closed through the end of May, extending earlier expectations that disruptions would ease by April.
That revision significantly alters the global supply outlook.
According to the EIA, approximately 10.5 million barrels per day (mbpd) of oil production was shut in across the Middle East in April. The agency now expects disruptions to rise further to 10.8mbpd this month as regional storage facilities approach capacity limits.
The latest figures also reflect expectations that Iran will face additional export constraints as the US blockade continues to disrupt shipping routes through the Strait of Hormuz.
Notably, the updated estimates are substantially higher than the EIA’s earlier forecast, which projected peak supply losses of 9.1mbpd in April.
Inventory drawdowns signal sustained tightness
The widening supply deficit is expected to accelerate the depletion of global oil inventories, reinforcing expectations that energy markets could remain tight well beyond the immediate geopolitical crisis.
The EIA now forecasts global oil stockpiles will decline by 2.6mbpd this year — a dramatic upward revision from its earlier estimate of roughly 300,000 bpd.
Such a rapid inventory drawdown suggests the market is increasingly relying on stored crude to offset supply shortages, a dynamic that historically amplifies price volatility and raises the risk of sustained inflationary pressure.
The tightening global market is already feeding directly into the US energy system.
According to the EIA, inventories of crude oil, gasoline and distillates in the United States have all fallen sharply as domestic producers increase exports to compensate for supply shortages abroad.
Distillate inventories — including diesel and heating oil — recently fell to their lowest levels since 2005, highlighting the strain on refined fuel markets.
Although US refineries are operating at elevated utilisation rates, domestic fuel supplies remain constrained because of exceptionally strong overseas demand for refined petroleum products.
During the week ending May 1, US petroleum product exports reached 8.2mbpd, including gasoline, diesel and jet fuel. That figure was more than 1.5mbpd higher than the same period last year.
US emerges as shock absorber for global energy markets
The data increasingly point to the United States functioning as the primary stabilising supplier in global energy markets.
As disruptions in the Gulf region remove crude supplies from international markets, global consumers are relying more heavily on US crude exports, refined fuels and liquefied natural gas.
That dynamic is strengthening revenues and export opportunities for American energy producers, particularly natural gas suppliers and refiners. However, it is also creating domestic economic trade-offs.
Higher export volumes are tightening US fuel availability and contributing to rising gasoline and diesel prices for American consumers, adding to broader inflationary pressures across transportation, manufacturing and household energy costs.
The situation also underscores a growing divergence between the oil and natural gas sectors.
While oil markets remain vulnerable to geopolitical disruptions because of concentrated supply routes in the Middle East, the United States’ large domestic natural gas reserves continue to provide relative supply stability. That advantage is increasingly reinforcing the role of natural gas as both an industrial feedstock and a strategic energy buffer during periods of global oil-market instability.
Analysts say that if instability in the Gulf persists, the global energy system could experience a longer-term reconfiguration of trade flows, with the United States assuming an even larger role in supplying both natural gas and refined fuels to international markets.
In that scenario, elevated energy prices, stronger US export demand and structurally higher industrial gas consumption may become defining features of the global energy landscape over the next several years.
