Global LNG Trade Threatened to Slow Down, Hormuz Strait is a Vulnerable Point

Illustration of an LNG carrier sailing carrying liquefied natural gas cargo. Shell estimates that global LNG trade in 2026 will stagnate due to shipping disruptions in the Strait of Hormuz that hinder supplies from the Middle East. (Photo: Pexels)

JAKARTA - The world's trade in liquefied natural gas or LNG is expected to stagnate in 2026. The main reason is the shipping disruption in the Strait of Hormuz, an important energy route connecting the Persian Gulf with global markets.

Citing an Anadolu Agency report, Tuesday, June 30, Shell in its LNG Outlook 2026 report said that LNG trade this year could be stalled after supplies from the Middle East were disrupted.

By 2025, global LNG trade reached 422 million tons. Shell originally estimated that volume would increase significantly in 2026. However, conflicts disrupting shipping in the Strait of Hormuz have held back about a fifth of the world's monthly LNG supply.

The impact is immediate. LNG prices in the spot market rose and some Asian importers were also under pressure. For countries that rely on imports, disruptions in major energy lines can put pressure on energy costs.

"This conflict creates shocks in the entire economic system with cascading impacts on various sectors. However, the LNG industry has proven to be resilient and able to adapt to changing market conditions," said Cederic Cremers, President of Integrated Gas Shell, quoted by Anadolu.

Shell said supply disruptions from the Middle East were partially offset by new gas liquefaction facilities in North America, improved performance of existing LNG plants, and slowing LNG imports in Asia.

If shipping in the Strait of Hormuz returns to normal in the summer of this year, global LNG trade in 2026 is expected to be in the same range as last year. New growth is expected to return in 2027.

The Strait of Hormuz is a crucial point because it connects Gulf energy exporters to world markets. Disruptions in this line could affect shipments from major LNG producers in the region, including Qatar.

Despite the setback this year, long-term LNG demand remains large. According to Anadolu Agency, Shell estimates that global LNG demand will rise by almost 65 percent by 2050, approaching 700 million tons per year.

Shell also estimates that around 180 million tons of new LNG supplies per year will enter the market by 2030. This additional supply is expected to make gas more available, more affordable, and open up demand in new markets.

However, not all countries can automatically enjoy the additional supply. Shell reminded that importing countries need to have ready infrastructure, especially regasification terminals, which are facilities for converting LNG back into gas, as well as pipeline networks.

This warning is important for South Asia and Southeast Asia. The two regions are expected to account for about 40 percent of global LNG imports by 2050.

In Europe, LNG is also still seen as important for energy security. Domestic gas production continues to decline, while electricity from renewable energy is getting bigger but still needs a balancing supply.

At the peak of the Middle East crisis, Asian spot LNG prices briefly breached US$20 per MMBtu. MMBtu is a unit of energy commonly used in gas trading.

However, that price is still well below the 2022 spike after the Russia-Ukraine war, a sign that the LNG market is now stronger against turmoil.