Shell warned Tuesday that global liquefied natural gas supply could contract this year if disruptions in the Strait of Hormuz persist beyond summer. The energy major's annual LNG report projects 2026 cargos matching last year's 422 million metric tons, scrapping earlier growth expectations. Rising tensions in the Middle East have already blocked roughly one-fifth of global LNG shipments from exiting the critical waterway.

The escalation began with conflict in the region that upended energy markets worldwide. Infrastructure damage across the area has further reduced available supplies, compounding the shipping bottleneck. While cargo-laden vessels continue navigating the strait, weekend exchanges between the U.S. and Iran underscore ongoing risks to energy transit routes.

Shell's revised outlook reflects how geopolitical instability directly impacts energy commodity flows. The company expects growth to resume in 2027, assuming normal shipping patterns return. However, continued disruption through year-end could trigger an unusual annual supply decline, pressuring global energy prices and challenging import-dependent markets.

Peace negotiations between American and Iranian officials are slated to restart imminently, though fragility in the region keeps supply chains vulnerable. Energy traders are monitoring developments closely, as any prolonged closure of this maritime chokepoint would reverberate through global gas pricing and force buyers to seek alternative supply arrangements.