US-Iran war derails global LNG trade as Shell sees 65% demand surge by 2050

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 percent from 2025 levels, according to Shell’s LNG Outlook 2026, as countries continue to prioritise flexible and reliable energy security offered by gas and LNG.

Tensions spurred by the US-Iran war are stalling the global supply of LNG, falling well below the 2026 projections by the major energy company Shell, though it is expected to rise sharply in 2027.

The closure of the Strait of Hormuz, a significant waterway, during the peak of the war led to a bust in global crude and gas supply, skyrocketing prices, and the shut-in of around one-fifth of global monthly LNG supply.

Shell had expected this year’s LNG trade to surpass the 422 million metric tons reached in 2025; however, the closure of the strait hampered trade.

But the energy company in its latest 2026 LNG Outlook expects global LNG demand to still rise by around 65 percent by 2050, driven largely by Asia as countries seek lower-emission alternatives to coal and data centres boost power demand.

“A total of 422 million tonnes of LNG was traded in 2025 and this was expected to increase significantly in 2026,” Shell noted in the outlook.

Adding that: “However, severe 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, pushing up prices on the spot market and adversely affecting some countries in Asia.”

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Looking ahead, 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 US-Iran war 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 expected higher prices to curb South Asian demand, with buyers turning to alternative LNG sources or switching to coal and domestic gas.

Cederic Cremers, president of Integrated Gas at Shell, said that while more investment in both supply and demand infrastructure is needed, the long-term outlook remains strong and LNG will continue to be a stabilising force in the global energy system.

“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,” Cremers said.

Supply growth on the way

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

However, the ability to benefit from new supply will depend on the availability of infrastructure in importing countries, including regasification capacity and pipeline connectivity, especially in South and Southeast Asia.

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Forecasts show that those regions will account for around 40 percent 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.

Emerging segments of demand are also growing rapidly. According to forecasts, LNG bunkering will grow sevenfold to 27 million tonnes by 2035, more than the amount of LNG imported by India last year.

LNG will continue to have a vital role in delivering energy security to Europe, to balance intermittent renewables as domestic gas production declines.

To meet the growing demand, significant additional investment will be needed 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.

A more resilient market

Although spot prices of LNG in Asia increased to more than $20 per million British thermal units (MMBtu) at the peak of the Middle East crisis, they remained significantly lower than in 2022 when gas supplies were disrupted following the Russian invasion of Ukraine, reflecting the greater resilience of the LNG market now.