Shell cautioned that a prolonged disruption of shipping through the Strait of Hormuz could result in a rare reduction in global liquefied natural gas (LNG) supply in 2026, according to its annual LNG report. The British energy firm said the outlook published Tuesday shows physical LNG cargo volumes this year could remain level with 2025 at about 422 million metric tonnes, rather than rise, and that growth would only resume in 2027 if transit through the waterway returns to normal this summer.
The company noted that if interruptions persist for the remainder of the year, the market may experience an unusual year-on-year supply contraction. Shell attributed the immediate supply pain to conflict in the Middle East that has left roughly one-fifth of global LNG volumes unable to transit the strategic strait. The report also cites damage to regional energy infrastructure as a factor restricting near-term supplies.
Prior to the conflict, Shell had expected a meaningful increase in global LNG sales during 2026. The recent disruption has altered that trajectory in the near term, even as some cargo-laden vessels are currently navigating out of the strait.
Shell's report emphasizes the fragile nature of the situation. While cargoes are moving, diplomatic progress remains uncertain: the company referenced exchanges of fire between the U.S. and Iran over a recent weekend, and noted that the two sides were due to resume peace talks as soon as Tuesday. At the height of the crisis in the Middle East, Asian spot LNG prices rose above $20 per million British thermal units.
Looking further ahead, Shell's report maintains a long-run view of rising global demand. The company projects world LNG demand will approach nearly 700 million tonnes per year by 2050 - about a 65% increase from 2025 levels. Separately, Shell forecasts roughly 180 million tonnes of annual new supply entering the market by 2030.
What this means
- Near-term market balance is contingent on the resumption of normal shipping through the Strait of Hormuz this summer.
- Continued disruption could lead to an uncommon annual contraction in LNG supply in 2026.
- Shell retains a long-term expectation of materially higher LNG demand by mid-century, with substantial new supply additions planned by 2030.