It is not a problem with OBS. I tried using Nividia ShadowPlay to record but it also lagged. On my OBS I used HVENC as my video encoder, which is essentially just ShadowPlay. I tested the game with the software (x264) encoder on OBS and I didnt have any stutters.

So to anyone who might have similar stuttering as I did on Lethal Company, try turning off Instant replay on ShadowPlay or not using HVENC when recording.

When I record using the windows snipping tool I dont have stutters so it seems to be a problem with obs or something else idk.

Lethal Company runs perfectly fine while not recording, but when I do record with OBS every 5-10 minutes in game I get a long 10 second freeze.

This happens also when I use zero mods.

If anyone knows a way to fix this issue please tell me.