Starting in 2016, the US has morphed into the world’s largest LNG exporter, eclipsing Australia and Qatar. Trump is determined to achieve global energy dominance as he exploits the geopolitical leverage American LNG exports give him in his relations with Europe, Asia and the GCC. He has pledged to dramatically expand US natural gas production via his “drill baby drill” ethos, rescinded Biden’s environmental pause on new LNG projects, embrace deregulation and pledged to attract trillions in foreign investments to transform Alaska LNG as the key fuel source for Asian allies like Japan, South Korea, Taiwan and the Philippines. At a time when the US is already the world’s largest oil producer, pumping 13.5-MBD against Saudi Arabia’s 9-MBD, Trump’s ambition to increase natural gas production by 60% will have a seismic impact on the trade flows and geopolitics of the global LNG market in the next 5-years.
The twin revolutionary technologies of horizontal drilling and hydraulic fracturing enabled the United States to become the world’s largest producer of natural gas, with an output of more than 100 billion cubic feet per day, generating a surplus that can be exported via the construction of a dozen giant LNG export terminals on the Gulf Coast. The sheer scale of US natural gas production in the past two decades, from vast reservoirs in North Dakota to Texas’s Permian Basin have meant that US prices averaged $3.50 per million BTU, 70% below the spot LNG prices prevailing in Europe and Asia.
The AI revolution, sanctions on Russia even before the 2022 invasion of Ukraine and the rising demand for electricity in the fast growing economies of Asia have created an insatiable appetite for relatively cheap, accessible, reliable American LNG across the world.
American LNG imports enabled Europe to break Russia’s chokehold on pipeline gas from Gazprom’s West Siberian mega-gas fields after Putin’s 2022 invasion of Ukraine. In March 2025, Europe is the destination of more than two thirds of all American LNG tanker cargoes shipped from the leading US export terminal located on the Texas and Louisiana’s Gulf Coast Ports. However, Trump’s tariff threats, decision to exclude the EU from peace talks with Ukraine and pro-Kremlin diplomatic pivot has made Germany and France nervous about their new LNG dependence on an increasingly isolationist and erratic America under Trump 2.0.
While there is no real systemic threat to the Transatlantic LNG trade, Europe’s chancelleries will increasingly seek to diversify their energy supply via increasing imports from Qatar, Algeria, Nigeria and Angola. It is even possible that Europe may buy LNG from Russia if Putin concludes a peace deal with Ukraine that is not Carthaginian and thus unacceptable to the Berlin/Paris elite that dominates EU realpolitik after the end of sanctions. Spot LNG shipments from Africa are constrained by the limited production capacity while Qatari LNG cargoes have been disrupted by Houthi attacks in the Red Sea. The threat to US market dominance is minimal unless Trump’s tariff threats escalate into a trade war with Europe which has exchanged its former energy dependency on an unreliable Kremlin with a new vulnerability to an unreliable Trump White House.
Asian countries who have a substantial trade surplus with the US now have no choice but to significantly ramp up LNG imports from America. This was the core takeaway from Indian PM Modi’s state visit to Washington to protect India’s $130 billion bilateral trade. India is the world’s fastest growing emerging economy with 6%+ GDP growth and a population of 1.4 billion people with a per capita income of only $2700. India imports 5.4-MBD while its refineries are configured to process Iranian, Russian and GCC oil, whose freight costs are only $1.5 per barrel, one third the freight cost of US oil imports. The economics of American LNG imports is far more efficient since freight cost efficiency is far better than for crude oil and the super chilled fuel can be gasified to connect to India’s power grid. India will be a major market for US LNG exports at the expense of existing GCC suppliers, led by Qatar.
Japan, South Korea and Taiwan will also follow India’s example and dramatically expand their imports of US LNG to offset their trade surplus with the planet’s largest economy. China, the largest LNG importer in the world, has imposed retaliatory tariffs on US LNG last month but this loss of market share will be amply compensated by a quantum increase in US LNG shipments in gas guzzling economies of the wider Pacific Rim and South Asia.
The surge in American LNG exports will mean a dramatic fall in long term prices by the late 2020s. This is the reason many Asian countries are renegotiating their long term supply contracts with GCC suppliers led by Qatar. This could have an adverse impact on Qatar’s epic North Field expansion plans.
Tokyo, Seoul and Taipei are also determined to reduce their energy dependence on oil and gas exports from the Middle East. Trump’s tariff threats provide them with an immediate fiscal incentive to move away from long term supply contracts with Qatar and other GCC suppliers, even as long term prices decline due to a potential LNG glut later in this decade. Gulf LNG, like Gulf oil, faces a bearish headwind from American energy dominance.
Also published on Medium.
