What if a customer wants to print your image on a t-shirt and sell an unlimited number of shirts on his web shop; would an Extended License be sufficient?

Because the Shutterstock license says:
"Incorporated into merchandise for resale or distribution, without regard to the size of the manufacturing or duplication run of such merchandise "

...but also says that Print on Demand is prohibited, even with an Extended License.

Doesn't that contradict each other? Isn't POD (tshirt) not the same principle as "Incorporated into merchandise for resale or distribution">

Two different things. A tshirt company can create their own tshirts and sell them, but a designer couldn't use the illustration on Zazzle or Cafe Press.

We could argue about the "principle" involved, but I am glad POD uses are prohibited as I sell on those sites directly.