Global gas demand is expected to reach a record high next year as competition for fuel intensifies between Asia and Europe, according to the International Energy Agency (IEA).

After a decline in imports this year, Europe will need more liquefied natural gas - LNG by 2025, tightening the market and narrowing the price gap with Asia, the agency stated in its report on Thursday. "Gas supplies remain constrained, with uncertainties weighing on the outlook for 2025," the IEA noted.

The IEA’s forecast signals another challenging year for Europe, where consumers continue to face high energy bills despite a significant reduction in gas prices compared to the 2022 crisis. Geopolitical risks, from the war in Ukraine to the escalating conflict in the Middle East, have further fueled market volatility and price increases.

The IEA projects that European gas consumption may decrease by 2% this year compared to 2023. While industrial demand has rebounded, it remains below pre-crisis levels, and gas usage in the energy sector continues to decline due to the rise of renewable energy sources.

Looking ahead to 2025, European demand may increase by 1%. If Russian gas flows through Ukraine are halted next year—a key IEA scenario given that the fuel transit agreement between Moscow and Kyiv expires at the end of December—Europe will require more LNG.

Globally, gas consumption is set to reach a new record this year before expanding further in 2025, with Asia remaining the primary driver of growth, according to the IEA.