Global Shocks Accelerate North American LNG Growth

Middle East supply disruptions and record-low European storage levels have driven international natural gas benchmarks to multi-year highs. While long-term contracts insulate North American exporters from spot volatility, persistent global deficits are providing the commercial incentive necessary to accelerate a historic capacity expansion. With total U.S. liquefied natural gas (LNG) export capacity already on track to roughly double by 2031, a global preference for North American LNG supply is driving further investment in natural gas infrastructure across the continent.

Middle East supply disruptions and low European storage have pushed global natural gas prices to multi-year highs. With U.S. LNG export capacity already expected to double in the next five years, the current macro landscape is fueling further expansion of North American LNG capacity. New export terminals are advancing rapidly across the U.S., Canada, and Mexico. Several major projects expect to begin construction this year.

Late last year, ample U.S. supply and tight margins briefly pushed profitability for spot LNG exports below the standard fixed liquefaction fee of $2–3 per million British thermal unit. However, LNG fundamentals quickly changed in March. The sudden outbreak of conflict in the Middle East and the effective closure of the Strait of Hormuz cut off roughly 20% of global LNG trade. Compounding this, Iranian strikes caused significant damage to Qatari LNG export terminals, potentially curbing their output for three to five years. While the oil market has found limited relief through alternative pipelines and overland trucking routes that bypass the strait, LNG requires specialized infrastructure that leaves it essentially trapped. LNG tanker traffic through the Strait of Hormuz has virtually halted, forcing QatarEnergy to repeatedly extend its force majeure declarations, which legally shield the company from penalties as it remains unable to fulfill its contracted deliveries.

Europe is heading toward the winter heating season with its natural gas inventories at 15-year lows, as the region expected that the Iran war would end quickly and prices would drop once shipments resumed. Most European gas buyers delayed their usual summer restocking. Storage levels remain well below the 80% threshold mandated by the European Commission for November. European importers are now being forced into a bidding war with Asian buyers for spot LNG cargoes to secure necessary volumes. (Asian countries are also turning to coal, with the VettaFi Global Coal Index (COALX) up 20.8% from July 17 through September 10.)

As the chart below illustrates, this supply shortage has pushed the premiums of global LNG markers over the U.S. Henry Hub benchmark to their highest levels since early 2023. Higher international benchmark prices reinforce the strategic value of North American LNG exports. While long-term fixed-fee contracts limit exposure to spot prices for most LNG exporters, higher international premiums have strengthened earnings on their remaining uncontracted capacity and provided strong commercial backing for a new wave of U.S. LNG export capacity expansions.

LNG exports are expected to be the largest driver of incremental U.S. natural gas demand over the next few years. As shown in the chart below, total U.S. peak nameplate export capacity is on track to roughly double over the next five years based on projects under construction, growing from 18.7 billion cubic feet per day (Bcf/d) today to 37.4 Bcf/d by 2031. To put this growth into perspective, the U.S. consumed 91.9 Bcf/d of natural gas in 2025. Operating export terminals and projects under construction are mostly contracted throu...