Hormuz disruption to stall 2026 LNG trade, demand to rise by 2050, says Shell

By Marwa Rashad, Stephanie Kelly and Emily Chow

LONDON/SINGAPORE, June 30 (Reuters) - Shipping disruptions in the Strait of Hormuz due to the Iran war could keep global liquefied natural gas trade flat this year if flows return to normal in the next three months, Shell said on Tuesday, though it expects growth to resume in 2027 and demand to rise sharply by 2050.

The severe disruption to tanker traffic through the crucial waterway has shut in around one-fifth of global monthly LNG supply since the conflict began. Energy major Shell had expected LNG trade, which reached 422 million metric tons in 2025, to increase in 2026.

Shell, however, expects global LNG demand to still rise by around 65% by 2050, driven largely by Asia as countries seek lower-emission alternatives to coal and data centres boost power demand, according to the company's annual LNG outlook.

Global demand is likely to reach nearly 700 million tons a year by that date, the world's largest trader of the superchilled fuel said.

"The conflict created a system-wide shock with disruption cascading across all segments of the economy, but the LNG industry has proved resilient and able to adapt to changing market conditions," Cederic Cremers, Shell's president of integrated gas, said in the report.

The company said recent growth in LNG supply and regasification infrastructure had improved market resilience and helped limit the impact of the disruption to shipping through Hormuz.

In addition, the ramp-up of new liquefaction facilities in North America, improved performance at existing plants and slower Asian LNG imports have helped offset reduced supply from the Middle East.

The U.S.-Israeli war on Iran has disrupted the global LNG outlook, driving up prices, damaging Qatar's export facilities and delaying new supply, casting doubt on demand from price-sensitive Asian buyers. Analysts expect higher prices to curb South Asian demand, with buyers turning to alternative LNG sources or switching to coal and domestic gas.

Asian LNG imports for the first half of 2026 are down nearly 4% to 127.70 million tons compared with the corresponding period last year, according to data from analytics firm Kpler.

Although Asian LNG spot prices rose above $20 per million British thermal units at the peak of the Middle East crisis, they remained well below levels seen in 2022 following Russia's invasion of Ukraine, reflecting greater resilience in the LNG market, Shell said.

Asian spot LNG prices were last at $15.35/mmBtu, a near four-month low as the market stayed hopeful about a peace deal to end the conflict.

NEED FOR NEW INVESTMENTS

About 180 million tons per year of new LNG supply is forecast to enter the market by 2030, improving the availability and affordability of gas and opening up demand in new markets.

Forecasts show South and Southeast Asia will account for around 40% of global LNG imports by 2050 as countries seek lower-emission alternatives to coal to meet rapidly growing energy demand.

The growth comes as domestic gas production in emerging Asian countries is expected to decline even as demand rises, meaning the region will need around 300 million tons of LNG per year to meet total gas demand by 2050, according to Shell.

In more mature Asian markets such as Japan, data centres are emerging as a new source of power demand, the report said.

However, in China, the world's largest LNG importer, Shell expects LNG imports to moderate even as gas demand keeps growing, forecasting a fall in annual LNG imports this year due to the Iran conflict.

LNG will also continue to play a key role in European energy security and help balance intermittent renewable power generation as domestic gas production declines, Shell said.

To meet rising demand, significant additional investment will be needed in new LNG export projects through the 2030s and 2040s, with around 200 million tons per year of new supply required in addition to projects already under construction.

(Reporting by Marwa Rashad and Stephanie Kelly in London and Emily Chow in Singapore; Editing by Jan Harvey and Emelia Sithole-Matarise)