Global liquefied natural gas (LNG) markets are navigating two contrasting trends as geopolitical disruptions reshape near-term trade while long-term demand continues to strengthen. According to Shell's latest LNG outlook, shipping disruptions through the Strait of Hormuz could prevent global LNG trade from expanding during 2026 if normal vessel movements are restored only after several months. However, the company maintains that structural demand growth remains intact, projecting global LNG consumption to rise by around 65% by 2050.
The outlook reflects how short-term geopolitical events can temporarily interrupt energy trade without necessarily altering long-term consumption trends. Shell believes that growing electricity demand, declining domestic gas production in several regions and the transition away from coal will continue to support LNG consumption over the coming decades, particularly across Asia.
Hormuz Disruption Alters Near-Term Market Dynamics
The Strait of Hormuz remains one of the world's most strategically important maritime routes for oil and LNG exports. Any disruption to tanker traffic immediately affects global energy markets because a significant share of LNG shipments from major Gulf exporters passes through the narrow waterway.
Shell estimates that the recent disruption effectively removed around one-fifth of monthly global LNG supply from normal trade flows, forcing buyers and suppliers to adjust cargo movements, shipping schedules and procurement strategies. The company had previously expected global LNG trade to expand beyond the approximately 422 million metric tonnes recorded in 2025. Instead, shipments during 2026 could remain broadly unchanged if shipping conditions gradually normalize within the expected timeframe.
Although market participants have adapted by sourcing cargoes from alternative suppliers and redirecting shipments where possible, higher transportation risks and logistical constraints have increased uncertainty across the global LNG market.
Why Long-Term Demand Remains Strong
Despite the short-term disruption, Shell expects global LNG demand to approach 700 million metric tonnes annually by 2050. The forecast is driven primarily by Asia, where rapid economic development, urbanisation and expanding electricity consumption continue to increase demand for cleaner-burning fuels.
Many developing economies are replacing coal-fired power generation with natural gas to lower emissions while maintaining reliable electricity supplies. Natural gas also complements renewable energy by providing flexible generation when solar and wind output fluctuates, making LNG an important component of energy transition strategies.
Another emerging source of demand comes from the rapid expansion of data centres. Growing digital infrastructure, cloud computing and artificial intelligence require substantial amounts of reliable electricity, increasing demand for stable power generation that natural gas can help provide.
Shell notes that the LNG industry has become more resilient than during previous periods of market disruption. Significant investment in regasification terminals, additional storage facilities and diversified supply sources has strengthened the industry's ability to respond to unexpected supply interruptions.
The expansion of liquefaction capacity in North America, improved operational performance at existing export facilities and slower import growth in parts of Asia have helped offset some of the supply losses linked to Middle Eastern disruptions. These developments have limited price volatility compared with earlier global energy crises.
Although Asian spot LNG prices rose sharply during the height of the geopolitical tensions, they remained below the extraordinary levels experienced during the global energy crisis that followed Russia's invasion of Ukraine. As supply concerns eased and hopes for improved regional stability increased, spot prices moved lower, reflecting greater confidence in market adaptability.
Asia and Europe Shape Future Investment Needs
Shell expects South and Southeast Asia to account for roughly 40% of global LNG imports by 2050. Domestic gas production across many emerging Asian economies is projected to decline even as energy demand continues rising, increasing dependence on imported LNG.
China is expected to remain a major gas consumer, although LNG import growth may moderate as domestic production and pipeline imports expand. Meanwhile, mature markets such as Japan are seeing new sources of electricity demand emerge, including energy-intensive data centres.
Europe is also expected to maintain LNG as a key element of its energy security strategy. Declining domestic gas production and the need to balance intermittent renewable electricity generation continue to support LNG imports across the region.
Meeting projected global demand will require substantial investment throughout the LNG value chain. Shell estimates that, beyond projects already under construction, around 200 million metric tonnes of additional annual export capacity will be needed during the 2030s and 2040s to ensure adequate global supply while supporting long-term energy security.
(Source:www.reuters.com)
The outlook reflects how short-term geopolitical events can temporarily interrupt energy trade without necessarily altering long-term consumption trends. Shell believes that growing electricity demand, declining domestic gas production in several regions and the transition away from coal will continue to support LNG consumption over the coming decades, particularly across Asia.
Hormuz Disruption Alters Near-Term Market Dynamics
The Strait of Hormuz remains one of the world's most strategically important maritime routes for oil and LNG exports. Any disruption to tanker traffic immediately affects global energy markets because a significant share of LNG shipments from major Gulf exporters passes through the narrow waterway.
Shell estimates that the recent disruption effectively removed around one-fifth of monthly global LNG supply from normal trade flows, forcing buyers and suppliers to adjust cargo movements, shipping schedules and procurement strategies. The company had previously expected global LNG trade to expand beyond the approximately 422 million metric tonnes recorded in 2025. Instead, shipments during 2026 could remain broadly unchanged if shipping conditions gradually normalize within the expected timeframe.
Although market participants have adapted by sourcing cargoes from alternative suppliers and redirecting shipments where possible, higher transportation risks and logistical constraints have increased uncertainty across the global LNG market.
Why Long-Term Demand Remains Strong
Despite the short-term disruption, Shell expects global LNG demand to approach 700 million metric tonnes annually by 2050. The forecast is driven primarily by Asia, where rapid economic development, urbanisation and expanding electricity consumption continue to increase demand for cleaner-burning fuels.
Many developing economies are replacing coal-fired power generation with natural gas to lower emissions while maintaining reliable electricity supplies. Natural gas also complements renewable energy by providing flexible generation when solar and wind output fluctuates, making LNG an important component of energy transition strategies.
Another emerging source of demand comes from the rapid expansion of data centres. Growing digital infrastructure, cloud computing and artificial intelligence require substantial amounts of reliable electricity, increasing demand for stable power generation that natural gas can help provide.
Shell notes that the LNG industry has become more resilient than during previous periods of market disruption. Significant investment in regasification terminals, additional storage facilities and diversified supply sources has strengthened the industry's ability to respond to unexpected supply interruptions.
The expansion of liquefaction capacity in North America, improved operational performance at existing export facilities and slower import growth in parts of Asia have helped offset some of the supply losses linked to Middle Eastern disruptions. These developments have limited price volatility compared with earlier global energy crises.
Although Asian spot LNG prices rose sharply during the height of the geopolitical tensions, they remained below the extraordinary levels experienced during the global energy crisis that followed Russia's invasion of Ukraine. As supply concerns eased and hopes for improved regional stability increased, spot prices moved lower, reflecting greater confidence in market adaptability.
Asia and Europe Shape Future Investment Needs
Shell expects South and Southeast Asia to account for roughly 40% of global LNG imports by 2050. Domestic gas production across many emerging Asian economies is projected to decline even as energy demand continues rising, increasing dependence on imported LNG.
China is expected to remain a major gas consumer, although LNG import growth may moderate as domestic production and pipeline imports expand. Meanwhile, mature markets such as Japan are seeing new sources of electricity demand emerge, including energy-intensive data centres.
Europe is also expected to maintain LNG as a key element of its energy security strategy. Declining domestic gas production and the need to balance intermittent renewable electricity generation continue to support LNG imports across the region.
Meeting projected global demand will require substantial investment throughout the LNG value chain. Shell estimates that, beyond projects already under construction, around 200 million metric tonnes of additional annual export capacity will be needed during the 2030s and 2040s to ensure adequate global supply while supporting long-term energy security.
(Source:www.reuters.com)
