Shell Plc’s Chief Executive Officer, Wael Sawan, predicts that global liquefied natural gas (LNG) trade for 2026 will remain flat compared to the previous year, even if the Strait of Hormuz, a critical shipping lane, reopens as anticipated this summer. This outlook suggests that the prolonged blockage has caused such significant disruptions to supply chains and drained reserves to such an extent that a prompt return to pre-blockade trade levels is not feasible this year. The company's assessment underscores the severe impact of the blockade on the global energy market.
Sawan highlighted that the recent closure of the Strait of Hormuz has led to an estimated 900 million barrels of oil equivalent that have not been produced over the past couple of months. Global energy inventories, including natural gas, have been significantly drawn down to compensate for this production shortfall. These stock drawdowns have now reached critically low levels, necessitating a period of replenishment even after the Strait is fully operational. This situation has also prompted demand curtailment in various regions and an increase in fuel switching, as consumers and industries seek alternative energy sources.
The Shell CEO's concerns extend beyond 2026, as he warned that oil and LNG shortages could persist into the following year, underscoring the long-term ripple effects of the current supply crisis. While there are signs of an impending reopening of the Strait, fueled by a US-Iran interim peace deal, the damage to immediate supply availability and storage capacity means that market normalization will be a gradual process. The focus will now shift to how quickly producers can ramp up output and replenish global reserves once the shipping lane is fully accessible, particularly given Qatar's plans to rapidly restart LNG production to 50% capacity within a month and 80% within two months of reopening.
