Shell warns global LNG supply could contract if Strait of Hormuz disruption continues

Shell said global liquefied natural gas supply could end 2026 flat or even lower if disruption around the Strait of Hormuz continues, a warning that underscores how quickly the Middle East conflict has reshaped one of the world’s most important energy markets.

The warning came in Shell’s annual LNG market report, published June 30. The company said global physical LNG cargos sold in 2026 could land around 422 million metric tons, roughly in line with 2025, but that a rare year-over-year contraction is possible if shipping through the waterway does not normalize this summer.

Shell had previously expected significantly stronger LNG sales growth in 2026. The revised outlook suggests the biggest constraint on the market is no longer demand alone, but the ability of tankers to move safely through a chokepoint that is critical for Gulf exporters, especially Qatar.

A market reset driven by the Strait of Hormuz

The Strait of Hormuz is one of the world’s most important energy shipping lanes, and reporting on Shell’s outlook said about a fifth of global LNG supply has been unable to exit the waterway because of the conflict. That has tightened near-term availability and made route stability the central variable for the year.

Shell’s best-case scenario assumes traffic through the strait returns to normal this summer. If that happens, the company expects LNG cargoes to remain close to last year’s level rather than contracting. If it does not, the market could move from stalled growth into outright decline.

The report also said regional energy infrastructure has been damaged, adding another layer of pressure to supplies. That means the outlook depends on both shipping conditions and how quickly the broader operating environment in the Gulf stabilizes.

What it means for buyers and producers

For buyers in Europe and Asia, the warning matters because LNG is often the fuel that balances gas systems when pipeline supplies are tight or seasonal demand rises. A flat or shrinking global market would intensify competition for spot cargoes and complicate winter procurement planning.

For shippers and producers, especially those tied to Gulf exports, the outlook highlights how a localized disruption can ripple through global energy markets. Even without a major demand shock, limited access to a single chokepoint can alter pricing power, cargo flows and contracting decisions.

Shell’s report sits within a broader energy-security shock that has already affected oil and gas flows in the region. The company’s message is not that LNG demand has weakened, but that the market’s ability to grow in 2026 now depends heavily on whether the Strait of Hormuz returns to normal operating conditions in the coming months.

That makes the next few months decisive. A return to regular traffic would likely leave global LNG sales near 2025 levels. Continued disruption through year-end could make 2026 an unusual down year for a market that had been expected to expand more strongly.

What to watch next

The main near-term question is whether transit through the Strait of Hormuz normalizes this summer. Also important will be any follow-up commentary from Shell and whether other major LNG forecasters revise their own 2026 outlooks in response.

Market reaction from LNG buyers, traders and shipping operators will also be worth watching, especially if the disruption continues and winter procurement activity picks up.

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