American Gas Giants Cash In on Middle East Crisis

Crisis Creates Massive Opportunity

The escalating conflict between the U.S.-Israel alliance and Iran has triggered an unprecedented energy crisis that's delivering massive windfall profits to American natural gas exporters. Qatar halted production of liquefied natural gas Monday after Iran struck two key facilities in retaliation for the massive U.S.-Israel airstrikes that killed the Islamic Republic's head of state, Ayatollah Ali Khamenei. The shutdown leaves a huge gap. Qatar is the second-biggest LNG exporter in the world behind the U.S., accounting for about 20% of global supply .

According to Bloomberg, the Dutch TTF natural gas contract, Europe's benchmark, jumped nearly 45 per cent to above €46, marking its largest weekly gain in almost four years after QatarEnergy confirmed that output had been suspended . U.K. natural gas spiked about 50%, while Dutch futures jumped more than 45%. Shares of U.S. LNG exporters Cheniere Energy and Venture Global jumped about 6% and more than 14%, respectively .

According to the Financial Times, Venture Global and Cheniere Energy, two of the largest US LNG producers, are seeking to extract additional volumes from facilities in Texas and Louisiana and accelerate capacity expansion as consumers from the UK to Japan brace for shortages .

Maximizing Every Molecule

Leading U.S. exporters like Venture Global and Cheniere Energy are maximizing output (squeezing every extra molecule out they can from existing plants) and rerouting cargoes to meet global shortages . However, there are limits to how much extra capacity these companies can deliver immediately. U.S. producers can't ramp LNG production beyond current levels, Munton said. "They're basically running at capacity," he said. But since their customer contracts don't have fixed destinations, they can reroute LNG to meet demand .

Mike Sabel, CEO of Venture Global, a leading U.S. LNG exporter, said on a March 2 earnings call that his company has the "most available cargoes" to sell on the spot market. "There are markets in Asia that are also heavily reliant on Qatar supply. Every day that ships can't flow through, that creates a lot of backup and incremental demand," Sabel said. "We're uniquely able to move cargoes with our own vessels in this market."

The companies are positioned differently to capitalize on the crisis. Venture Global, which sells over 30 per cent of its LNG cargoes at spot prices, has seen stronger share price gains compared with Cheniere, which sells less than 10 per cent at spot rates . This explains why the former rose 5.6% yesterday, the latter 17.5%. The reason for the gap is that Venture sells a third of its volumes at spot prices, compared with less than a tenth for Cheniere .

America's Energy Advantage

The crisis highlights America's dominant position in global energy markets. The US surpassed Qatar and Australia as the world's largest LNG exporter in 2023, shipping over 100 million metric tonnes overseas . By the numbers: The U.S. market share in the global LNG market is expected to increase from roughly 25% in 2025 to around 33% by the end of the decade, the International Energy Agency said in a late January report .

Unlike oil markets, where disruptions immediately affect American consumers through higher gasoline prices, America's vast domestic supply insulates its market from natural gas shocks. "The U.S. covers all of its domestic demand with its own production but then produces more to export," said Alex Munton, director of global gas and LNG for research and consulting firm Rapidan Energy. "So when things happen internationally, that doesn't create problems for consumers in the U.S."

Long-Term Market Transformation

Energy experts believe this crisis could reshape global energy markets permanently. "This crisis could act as a catalyst to even more investment in US LNG," Munton said. "This crisis could act as a catalyst to even more investment in US LNG," Munton said. "It could give the export market a shot in the arm big time." "Financially, this is really good for U.S. LNG. It's a massive windfall for them." And, Joseph said, the crisis is unlikely to feed into domestic electricity prices .

The supply shock has also sent shipping costs soaring. Bloomberg reported that shipowners and brokers in the Atlantic Basin are demanding more than $200,000 per day for LNG tankers, roughly double what they were commanding less than 24 hours earlier. These offer rates were at least three times higher than the $61,500 assessed by Spark Commodities earlier Monday .

While new American LNG facilities are under construction, several new plants under construction will take months or years to become fully operational