Global energy markets remain under pressure amid continued disruption in the Middle East. Oil and fuel markets remain tight, and natural gas supplies in importing countries are increasingly coming into focus.
Europe is heading toward winter with unusually low natural gas inventories after disruption in the Strait of Hormuz took a significant portion of global LNG supply off the market. With fewer cargoes available, buyers in Europe and Asia are increasingly competing for limited supply, which has pushed European natural gas prices to their highest level since January 2023 last week.
Here in the United States however, the story looks very different: U.S. benchmark natural gas prices have remained relatively stable since the crisis began.
At the same time, the United States is exporting record volumes of LNG, helping supply a global market facing much tighter conditions.
Liquefied natural gas is the same natural gas Americans use in homes, businesses and power plants, cooled to -162 °C so it can be shipped across oceans.
Prior to the conflict in Iran, countries like Qatar and the UAE accounted for more than 20% of global LNG supply. Damage to LNG facilities and the closure of the Strait of Hormuz have stopped those exports, tightening a market already facing growing seasonal demand.
Europe is particularly exposed as it heads toward winter with lower-than-usual natural gas inventories. The EU’s gas storage facilities are only 67% full — their lowest level for this time of year in 15 years.
The United States is helping fill part of that global supply gap. U.S. LNG exports have reached record levels this year, while U.S. benchmark natural gas prices remain far below those in Europe and Asia.
That contrast reflects an important difference in how natural gas markets work. Unlike crude oil, natural gas cannot move freely between global markets without first being liquefied and shipped as LNG. The amount that can reach overseas buyers is therefore limited by available LNG export capacity.
That means shortages overseas can drive fierce competition for available LNG cargoes without producing the same degree of pressure in the U.S. market.
The bigger reason America is in that stronger position is supply — and that starts with record domestic production.
Over the past two decades, innovation and technology have dramatically expanded U.S. natural gas production, making the United States the world's leading producer.
That growing supply has allowed the United States to meet substantial demand at home while becoming the world's leading LNG exporter — giving it greater flexibility to help supply tight global markets without leaving the domestic market short.
Record domestic gas production has helped keep the U.S. market well supplied while allowing the United States to provide record volumes of LNG to allies and trading partners facing much tighter markets. Maintaining that advantage will require good policy and continued investment in the production, pipelines and LNG terminals needed to move natural gas to consumers at home and abroad.
But U.S. production is only part of the equation. The rules governing energy trade also affect whether American LNG can reach overseas consumers efficiently and competitively. European policies such as the EU Methane Regulation and Corporate Sustainability Due Diligence Directive should be addressed to ensure their requirements are practical, workable, and do not create more uncertainty for global markets.
At a time of tight global supplies, America’s ability to produce more energy and move it where it is needed is an advantage worth preserving.
