Warriors shock the energy artery! Shell (SHEL.US): Global LNG trade is likely to stagnate in 2026, with demand still approaching 700 million tons by 2050.

On Tuesday, Royal Dutch Shell, the world's largest liquefied natural gas (LNG) trader, released its annual report "LNG Outlook 2026," outlining a market landscape of contrasts: due to the conflict in the Middle East blocking the energy artery of the Strait of Hormuz, global LNG trade volume in 2026 is expected to stop growing, rare, and remain the same as 2025 at 422 million tonnes; however, in the long term, driven by the energy transition in Asia and the surge in electricity demand, global LNG demand is expected to increase by about 65% by 2050, approaching nearly 700 million tonnes per year. 2026: A rare year of zero growth or even contraction Shell pointed out in the report that since the outbreak of the Middle East conflict and the blockage of transit through the Strait of Hormuz, about one-fifth of global LNG supply per month has been cut off. If the strait can resume normal navigation this summer, global LNG trade volume is expected to remain the same as in 2025 in 2026; but if the interruption lasts for weeks or even longer, global supply will experience a rare annual contraction in over a decade. This is in stark contrast to the expectations before the conflict erupted. Shell had previously projected a substantial increase in LNG sales volume in 2026, but the war disrupted the entire rhythm. Although LNG vessels are now sailing out of the Strait of Hormuz, the situation remains extremely fragile. Just this past weekend, the US and Iran again clashed, with both sides expected to restart talks soon, with the prospect of peace hanging in the balance. Shell also warned that even if the strait is ultimately confirmed safe, LNG facilities that have been shut down will take six to eight weeks to gradually resume production. Core facilities in Qatar damaged, capacity repair to take years Shell holds stakes in the Ras Laffan integrated facility in Qatar, one of the key pillars of global LNG supply. In March of this year, an Iranian missile struck this giant complex, damaging multiple production units. Qatar has stated that its approximately 17% of liquefaction capacity will need "several years to repair." In addition, the Pearl natural gas-to-oil facility operated by Shell in Qatar was also attacked during the conflict and is still in a state of shutdown. Due to this drag, Qatar's LNG exports have plummeted. From January to May of this year, Qatar's LNG exports plummeted by nearly 20 million tonnes compared to the same period last year. On the other side of the earth, US LNG exports have become a "ballast," with exports increasing by about 10 million tonnes from the same period last year, with monthly exports to Asia skyrocketing from less than 1 million tonnes in January to over 4 million tonnes in May, helping to cushion the supply crisis. Shell's outlook is more optimistic than some counterparts. Vitol Group and the International Energy Agency (IEA) both suggest that global LNG supply may remain tight for about two years; however, Shell predicts that as long as the strait resumes navigation, supply will return to a growth trajectory in 2027, and 2026 will just be a minor setback. Peak gas prices well below 2022 levels, market resilience tested Amid severe market volatility, LNG prices have surged significantly but have not spiraled out of control. The report shows that Asian spot LNG prices peaked at over $20 per million British thermal units during this crisis, reaching as high as $21.63, and have now fallen to around $15.35 per million British thermal units, near a four-month low; the Netherlands TTF contract reached a peak of $18.33 per million British thermal units. Both peaks are well below the levels seen in 2022 after the Russia-Ukraine conflict broke outwhen TTF prices soared to $71.55 per million British thermal units. Shell's analysis suggests that the continuous influx of new liquefaction capacity in North America, improvements in existing project performance, and a temporary slowdown in import growth in Asia have collectively offset the supply losses in the Middle East, enhancing market resilience. In addition, previously constructed regasification infrastructure has also helped economies digest the impact. Cederic Cremers, Shell's Integrated Gas President, said in the report, "This conflict has had a systemic impact, with ripple effects across all sectors of the economy, but the LNG industry has proven its resilience and ability to adapt to constantly changing market conditions." However, recent signs show pressures rising again. In the past few days, attacks on ships in the strait area have pushed up benchmark natural gas contract prices. The short-term suppressive effect of high gas prices on demand has already emerged. According to data from commodity analysis firm Kpler, Asian LNG imports in the first half of 2026 were approximately 127.7 million tonnes, down nearly 4% compared to the same period last year. Analysts predict that high prices will curb buying demand in South Asia, with some price-sensitive buyers possibly turning to other gas sources or even reverting to coal and domestic natural gas. Demand approaching 700 million tonnes in 2050, massive investments urgently needed Nevertheless, short-term clouds cannot hide the long-term structural DRIVE. Shell expects global LNG demand to surge by about 65% to nearly 700 million tonnes per year by 2050 from 422 million tonnes in 2025. South Asia and Southeast Asia will contribute about 40% of global LNG imports, as these countries actively seek low-carbon alternative energy sources to meet rapidly growing populations and energy demands. Meanwhile, in more mature Asian markets like Japan, data centers are becoming a new engine driving electricity and natural gas demand. Europe also cannot do without LNG. Shell points out that as European domestic natural gas production continues to decline, LNG will continue to play a crucial role in ensuring energy security and stabilizing intermittent renewable energy power generation fluctuations. To meet such a huge long-term demand, current investment efforts are far from sufficient. Shell estimates that by 2030, about 180 million tonnes per year of new LNG supply will enter the market, helping to improve the accessibility and economic viability of gas sources. However, looking ahead to the 2030s and 2040s, an additional approximately 200 million tonnes per year of new supply will be needed beyond projects already under construction, meaning massive investments will need to be added to new LNG export projects. Cremers emphasized, "While we need more investment at both ends of the supply and demand infrastructure, the long-term outlook remains strong, and LNG will continue to serve as a stabilizing force in the global energy system."