Trapped Bounty: US Drowns in Gas While Europe and Asia Pay Record Prices

The United States is grappling with a record natural gas surplus that has nowhere to go, as the war with Iran disrupts global liquefied natural gas (LNG) supply chains and creates a stark division between domestic and international markets. The crisis emerged on 28 February 2026 when conflict erupted in the Gulf, halting roughly 20 percent of global LNG supply. Qatari LNG facilities sustained damage, and tanker traffic through the Strait of Hormuz was disrupted by Iranian threats targeting commercial shipping.

The bifurcation in global gas markets has become extraordinary. Henry Hub futures, the U.S. benchmark traded in Louisiana, fell as much as 12 percent since the war began, reaching a 17-month low of around $2.52 per million British thermal units. Meanwhile, gas prices in Europe and Asia have surged as import-dependent buyers compete for limited cargoes. Despite this transatlantic price gap, U.S. producers cannot capitalize on the opportunity because the country's export infrastructure is already saturated.

The bottleneck centers on two structural issues. Pipelines connecting major producing regions to coastal export terminals are running at full capacity, and existing LNG export plants are processing gas at maximum throughput. New terminals and additional pipeline capacity are not expected to come online until late 2026 or early 2027, according to Bank of America analysts cited in the Reuters report.

The Permian Basin in West Texas illustrates the severity of the constraint. Spot gas prices at the Waha Hub have traded below zero almost every day in 2026, with cash prices hitting record lows below $9.50 per mmBtu in mid-April. Pipelines out of the basin lack spare capacity to move associated gas from oil drilling operations, turning a valuable fuel into what amounts to a waste byproduct. Waha cash prices were negative on 46 of the first 59 flow days of the year, roughly 80 percent of the time.

U.S. natural gas production reached a record 107.7 billion cubic feet per day in 2025, with the Energy Information Administration projecting further increases toward 121 bcfd in 2026. Demand from power-hungry data centers and new LNG export projects is expected to absorb additional volumes over time, but the immediate imbalance is forcing some producers to take action. EQT, the second-largest U.S. gas producer behind Expand Energy, announced strategic curtailments to keep gas in the ground until prices recover. EQT chief financial officer Jeremy Knop described the move as a form of storage during seasonally weak demand periods.

Some regions of the United States remain exposed to elevated international prices despite the domestic surplus. New England, for example, must import LNG cargoes during winter and burn oil for power generation because of insufficient pipeline connections to the national grid. This creates a paradox where consumers in parts of the country pay global premiums while producers thousands of kilometers away are forced to give gas away.

The supply chain implications extend well beyond U.S. borders. European utilities and Asian importers are paying sharply higher prices to refill storage and meet electricity demand, raising concerns about industrial competitiveness, household energy bills, and inflation. Countries that had counted on growing U.S. LNG exports to replace lost Russian pipeline gas or to meet rising Asian demand are finding the relief they expected is not materializing on the timeline they need.

LNG developers and midstream operators are now under pressure to accelerate construction of new export trains and pipelines. Roughly 4.5 billion cubic feet per day of additional Permian takeaway capacity is expected in the second half of 2026 and early 2027. Kinder Morgan's Gulf Coast Express expansion of 570 million cubic feet per day is targeted for mid-2026, while the 2.5 bcfd Blackcomb Pipeline and Energy Transfer's Hugh Brinson Pipeline are expected later in the year. Until these projects enter service, the global gas market is likely to remain split between an oversupplied U.S. market with depressed prices and tight international markets where buyers compete for every available cargo.

The duration of this market dislocation depends on the trajectory of the conflict in the Gulf, the pace of Qatari facility repairs, and the schedule for new export infrastructure in North America. With pipeline relief still months away, energy producers, traders, and policymakers face an extended period of structural mismatch in one of the world's most important commodity markets.