The Iran war has pushed up global LNG prices by disrupting Gulf exports, while US gas prices have fallen amid oversupply and export bottlenecks. The split has created winners among LNG sellers and pressure on domestic gas producers.
Washington: The conflict involving the United States and Iran has driven up internationally traded natural gas prices by disrupting exports from the Gulf, while the US domestic market remains oversupplied and unable to send much more fuel abroad.
According to the report, the war and Iran’s attacks on Gulf energy infrastructure have stopped 20pc of global liquefied natural gas supply. Qatari LNG facilities have been damaged, and tankers have not been able to pass through the Strait of Hormuz because of Iranian threats to target them.
The disruption has highlighted a sharp divide in the gas market. Countries in Europe and Asia that rely on imports are competing for limited supplies, but the United States — the world’s biggest producer, consumer and exporter of gas — continues to face abundant supply at home, with prices hovering near a 17-month low.
Since the war began on February 28, gas futures at the Henry Hub benchmark in Louisiana have fallen by as much as 12pc to a 17-month low of $2.52 per million British thermal units. Over the same period, prices in Europe and Asia have climbed by as much as 84pc and 108pc respectively, reaching about $21 to $22 per mmBtu.
Oil markets have not shown the same degree of divergence. Brent crude was trading at around $111 a barrel, while the US benchmark stood near $104 a barrel, with both up more than 50pc because of the war.
US bottlenecks limit exports
The report said the United States has enough gas to meet domestic needs and supply LNG export terminals. However, those plants were already running close to full capacity before the conflict, limiting the country’s ability to convert additional gas into LNG for overseas buyers despite much higher prices abroad.
In the Permian Basin, the country’s leading shale region, prices are even weaker than the national benchmark. Spot gas at the Waha Hub in West Texas has traded below zero on almost every day this year because pipelines leaving the basin are full and there is no extra room to move supply. As a result, some producers have had to pay others to take the gas.
US gas production, already at a record 107.7 billion cubic feet per day in 2025, is expected to continue rising, according to a recent US Energy Department outlook. The increase is tied to growing electricity demand from data centres and the need to supply new LNG export facilities. Output is also rising as oil companies increase production and as wells yield more gas over time as oil reserves decline.
Additional pipeline capacity is still some time away. Analysts at Bank of America said in a report:
“Meaningful transport relief doesn’t show up until late this year or early 2027, when larger pipeline projects are anticipated to start.”
The report added that some US regions are more exposed to high global gas prices than others. New England, for example, has to import costly LNG and burn oil for electricity in winter because it does not have enough links to the national gas pipeline network to meet heating demand.
Companies see uneven impact
Energy companies with uncommitted LNG cargoes have been among the main short-term beneficiaries of the market disruption. To make up for supplies lost from Qatar, buyers have turned to additional shipments from US LNG exporters including Venture Global, the country’s second-largest LNG company after Cheniere Energy.
Bob Yawger, director of energy futures at Mizuho, said “Venture Global is [relatively] new to the LNG game and had spot cargoes available to put out to the highest bidder”.
He added “Suddenly, everybody needs LNG now that QatarEnergy is out of the picture”.
US LNG export capacity is projected to nearly double over the next five years, rising from around 18 bcfd in 2025 to about 35 bcfd in 2030, based on plants currently being built.
Gas producers selling into the domestic market have not benefited in the same way. Much of their output is sold at US prices, which have remained under pressure because of near-record production, weak spring demand and ample gas in storage.
Low prices have already led some companies to reduce output. EQT, the second-largest US gas producer after Expand Energy, has cut production while waiting for stronger demand and higher prices later in the year. EQT Chief Financial Officer Jeremy Knop told analysts after the company reported earnings last week:
“Our strategic curtailments act as a form of storage, keeping gas in the ground [during] seasonally low periods of demand.”, he stated.
