US Gas Glut Creates Global Price Disparity Amid Iran Conflict
The ongoing war with Iran has disrupted global natural gas supplies, driving prices to record highs in Europe and Asia. Meanwhile, the United States is struggling to find a market for its abundant domestic gas production, with some producers even paying others to take it away.
According to Reuters, 20% of global liquefied natural gas (LNG) supply has been halted due to Iranian attacks on Gulf energy producers. As a result, import-dependent countries in Europe and Asia are scrambling for scarce supplies, while the US is awash in fuel with prices near 17-month lows.
The price disparity between US and international gas markets is stark, with US futures at the Henry Hub benchmark in Louisiana dropping by as much as 12% to $2.52 per million British thermal units (mmBtu), while global prices have soared by up to 84% in Europe and 108% in Asia.
In the Permian Basin, one of the top shale fields in the US, spot gas has traded below zero almost every day this year due to full pipelines. This has led to a situation where some producers must pay others to take away their excess gas, akin to a waste product.