To use Cloud Shell, you need to create a Storage Account or use an existing one. You can check your permission in your RG and if you have the right to create a Storage Account.
Prerequisite for launching a Cloud Shell is a Storage account and File Share that would be mounted to your session. Is this the first time you encountered the error? It appears as if you were once successful then there was no activity causing the the timeout. By design, the cloud shell session is reset after 20 min of no activity. What happens if you select quit or reconnect? when you were connecting to the shell, you must have been prompted to use existing storage account and File share or create a new one. Also look at storage accounts in your subscription and try to identify the one that is associated with the cloud shell.