The Iran war makes Cheniere Energy (LNG) a must own stock to hedge Gulf geopolitical risk

The moment Qatar Energy declared force majeure and cut output at Ras Laffan, the largest LNG complex on the planet, once Iranian missiles and drones began raining down on America’s Gulf allies, I knew that the time had come to hedge Strait of Hormuz chokepoint risk with by buying the shares of US LNG colossus Cheniere Energy (LNG) at $220. Yet I was stunned to see its price rise to $245 as the US-Israel and Iran competed to escalate the geopolitical stakes in yet another tragic Middle East war now destined to go down in history as the Third Gulf War after the convulsions of Kuwait/Desert Storm in 1991 and the neocon invasion of Baathist Iraq in 2003.

Cheniere is now Europe’s LNG exporter of the last resort now that the Old World cannot rely on gas imports from Russia or Qatar. The global demand for reliable American LNG from Cheniere’s multiple giant re-gasification plants on the Texas and Louisiana Gulf Coasts is now insatiable. No wonder this puppy (actually a giant St. Bernard in the gas business) has risen from $220 when Trump first declared war on the Ayatollah on Truth Social to $250 now as the war enters its 11th day. It seems so remote now but Cheniere, which I profiled few times in my posts last year (https://matein.substack.com/p/modiji-asimji-and-lng-realpolitik) when it was trading at 188 in mid-December when I closed my trading book on Christmas Eve and flew to Alex/Cairo on an archaeological discovery trip.

Easy money has now been made on this stock but I still see upside to $270-$280 if the war continues in its current intensity. Khamenei’s Jr. is beholden to the IRGC thugs who have crowned him as the new Supreme Burrito and the IRGC has resolved to wage a war of attrition against the US, Israel and the GCC, using the global economy as their instrument of leverage. This means, the world’s LNG market will retain its post traumatic stress disorder (PTSD) even if Trump declares a victory tomorrow.

Even though Cheniere has 40% market share, I expect it will grow at its rivals expense as it has already spent untold billions in its capacity expansion while its competitors are still in the process of ramping up their capex to build capacity. US natural gas is a global growth area as I doubt if the Seven Sisters will scale up their existing LNG footprint in the Gulf as long as a terrorist theocratic regime continues to exist in Iran.

After Exxon and Chevron’s spectacular success in Guyana and Australia LNG, I believe Brazil and Argentina will be the next El Dorados of global energy – the epic quest for oil, money and power in Dan Yergin’s The Prize is the secret history of the world in the Age of Trump and Bibi, just as it was in the time of John D. Rockefeller, Nubar Gulbenkian and J. Paul Getty 125 years ago.