Shell has warned that global liquefied natural gas (LNG) supply could contract in 2026 if disruption to shipping through the Strait of Hormuz persists, raising the prospect of an unexpected setback for the global energy market.
In its annual LNG report published on Tuesday, the British energy major said global physical LNG cargo sales this year are likely to match the 422 million metric tonnes recorded in 2025, with market growth expected to resume in 2027. However, the company cautioned that this outlook depends on normal shipping operations through the strategic waterway being restored during the summer.
According to Shell, a prolonged disruption lasting for the remainder of the year could result in one of the rare instances of annual LNG supply contraction, reversing earlier expectations of significant market growth in 2026.
The warning comes amid heightened tensions in the Middle East, where conflict has left around one-fifth of the world’s LNG supply unable to transit through the Strait of Hormuz. The company also noted that attacks on regional energy infrastructure have weakened supplies in the near term.
Although LNG carriers have resumed transiting the strait, Shell said the geopolitical situation remains uncertain. A fragile peace agreement has been tested by recent exchanges of fire between the United States and Iran over the weekend, even as both countries are expected to return to peace negotiations as early as Tuesday.
The disruption has already affected energy markets, with Asian spot LNG prices climbing above US$20 per million British thermal units at the height of the crisis.
Despite the near-term risks, Shell remains optimistic about the long-term outlook for LNG demand. The company forecasts global demand will rise to nearly 700 million tonnes annually by 2050, representing an increase of about 65 per cent from 2025 levels.
To meet that growing demand, Shell expects approximately 180 million tonnes of new annual LNG supply capacity to come on stream by 2030, reinforcing the fuel’s role in the global energy transition despite ongoing geopolitical uncertainties.
