Shell: LNG industry adapting to 'system-wide shock' created by Iran war

LNG trading,which was projected to grow "significantly" in 2026 prior to the outbreak of war in the Middle East, will only approach parity with 2025 totals if the volume of LNG flowing through the Strait of Hormuz "returns to normal this summer".

While 2025 saw a total of 422 million tonnes of LNG traded globally, this year’s severe, war-related disruption to shipping through the Strait of Hormuz has shut in around one-fifth of the world’s monthly LNG supply since the conflict started. 

The figures, from UK-headquartered oil and gas major Shell’s LNG Outlook 2026 report, highlight the extent of repercussions from the war on major energy market fortunes.

“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,” Shell Integrated Gas president Cederic Cremers said.

Notably, in declaring a long-term force majeure due to attacks on its facilities during the Iran war, QatarEnergy estimated that attacks from Iranian missiles on its facilities would result in annual revenue loss of US$20Bn.

According to QatarEnergy chief executive Saad Sherida Al-Kaabi, missile attacks damaged two LNG-producing trains, Train 4 and Train 6, curtailing 12.8M tonnes per annum (mta) of production, or approximately 17% of Qatar’s LNG exports. 

Shell cited a raft of new liquefaction facilities in North America, along with increased output from existing LNG production plants and lowered Asian LNG import demand as factors that have partially offset the impact of reduced supply from the Middle East.

"As a result, total LNG trade in 2026 could be similar to last year if shipping through the Strait of Hormuz returns to normal this summer, before returning to growth in 2027," Shell’s report said.

On 30 June, Italy’s Edison reported that QatarEnergy had once again extended the force majeure impact for cargoes to the Italian firm through September 2026.

The US, under the second Trump administration, has led in final investment decisions (FIDs) on LNG export plants, according to an International Energy Agency (IEA) report tracking global LNG capacity. On taking office again, US President Trump lifted a moratorium on LNG projects initiated under the prior Biden administration.

"In 2025, new LNG FIDs returned to the United States following the lifting of the permitting pause in January. During the year, the United States once again dominated final investment decisions, accounting for more than 90% of the total. With over 83 bcm/yr of new capacity sanctioned, 2025 marked a record year for US LNG FIDs. All FIDs is 2026 to date have also come from the United States," the May 2026 report said.

By Shell’s calculations, around 180 million tonnes of new annual LNG supply is forecast to enter the market by 2030, improving the availability and affordability of gas and opening up demand in new markets.

The supply growth projection came with a caveat in the Shell report, with limits set by the availability of infrastructure in importing countries, including regasification capacity and pipeline connectivity, especially in South and Southeast Asia.

"Forecasts show that those regions will account for around 40% of global LNG imports by 2050 to meet rapidly growing demand for energy with lower emissions than coal. In more mature Asian markets such as Japan, data centres are emerging as a new source of power demand," Shell’s report said.

The report noted that Asian markets in particular have been impacted by the current supply constriction and the increased spot market rates that have accompanied it, although the impact to the market was recorded as significantly lower than in 2022 when gas supplies were disrupted by Russia’s invasion of Ukraine.

With long-term supply agreements accounting for around two-thirds of total LNG trade, the average price that buyers paid for LNG in May was around US$11-12 per MMBtu, compared to US$7-11 in January before the conflict began.

Despite current market restrictions, global demand for liquefied natural gas (LNG) is expected to increase to nearly 700 million tonnes a year by 2050, an increase of around 65% from 2025 levels, according to Shell.
“While more investment in both supply and demand infrastructure is needed, the long-term outlook remains strong,” the report said.

The report noted that LNG bunkering will grow seven-fold to 27 million tonnes by 2035 and that Europe will continue to seek LNG "to balance intermittent renewables as domestic gas production declines".

In Shell’s view, growing demand will require significant additional investment in new LNG liquefaction plants through the 2030s and 2040s, "with around 200 million tonnes a year of new supply needed, in addition to projects already under construction".