The spread is five-to-one and it's been that way for three months. Henry Hub settled at $3.30 per million Btu on May 29, while Asian spot LNG closed the same day at mid-eighteen dollars. European gas at the Dutch TTF hub traded near $15.70. A molecule of American gas delivered to Tokyo or Rotterdam is worth five times what it fetched in Louisiana, and every cargo that sails is printing money at a rate the LNG trade has never seen sustained this long.
The math is simple and the incentive is absolute. US LNG exports hit a record 573.5 billion cubic feet in recent data from the EIA, and the number keeps climbing because the alternative—leaving gas in the ground or flaring it—is economic malpractice when the destination market is paying eighteen dollars. Feedgas flows to major US export terminals averaged 16.4 billion cubic feet per day in early June, down slightly from 17.1 bcfd in May largely due to seasonal maintenance, but the dip is temporary and the pull is structural. Golden Pass LNG exported its first cargo from Train 1 on April 22, adding roughly 0.7 bcfd of export capacity, and Corpus Christi's Train 6 is ramping. The US is the world's largest LNG exporter and the only swing supplier with spare capacity; every new train that fires up tightens the domestic market and widens the global arb.
The driver is Hormuz, and Hormuz isn't opening. The strait blockade from the Iran conflict has slumped LNG exports from the Middle East since the war began in March, driving European and Asian consumers to increase dependency on US supplies. Qatari cargoes that used to anchor Asian pricing are stuck behind a chokepoint nobody thinks reopens cleanly even if a ceasefire prints tomorrow, and the replacement molecule has to come from the Gulf Coast. JKM fell briefly to high-seventeen dollars early in the week of May 25 on reports of progress in US-Iran peace negotiations, then rebounded as attacks cast uncertainty over the talks. The market is pricing hope and trading reality, and reality is that every day the strait stays shut is another day the arb stays structural.
What makes this different from prior LNG booms—2021's Asian winter, Europe's 2022 scramble—is that the spread isn't a shock, it's a regime. The differential has held above ten dollars for most of the second quarter, and futures curves show it staying wide through year-end. Global near-month futures prices have remained elevated amid the Hormuz closure, and price spreads between US and international markets narrowed in April from mid-March highs but remained wider than before the strait closure due to near-maximum export capacity utilization. Utilization is maxed because the arb pays for everything—the feedgas, the liquefaction toll, the twenty-day sail to Asia, and a profit that would make a equity desk jealous. The constraint now is steel: how fast can you build trains, and how many molecules can the pipes deliver to tidewater.
The tell is what happens to Henry Hub when every marginal cubic foot is already spoken for. Prices turned upward following the July contract rollover on May 27 as expectations of rising summer temperatures factored in, reaching $3.3 by May 29, and the build in inventories reported May 28 came in below market expectations. Storage is building slower than forecast because the export pull is relentless, and the summer cooling load is layering on top. Output in the Lower 48 averaged 108.8 bcfd so far in June, down from 109.7 bcfd in May, and production declines likely narrowed the storage surplus to around five percent above normal from roughly six percent a week earlier. Domestic gas isn't cheap anymore—it's just cheaper than the alternative, which is paying eighteen dollars for a Qatari cargo that isn't coming.
The trade here is time and capacity. Every new export train that comes online—and there are six more in the queue through 2027—pulls another half-billion cubic feet per day out of the domestic market and ships it to a buyer paying a five-fold premium. The arb doesn't close until Hormuz fully reopens or European storage refills to the point demand destruction kicks in, and neither is happening this summer. The molecule is American, the margin is historic, and the infrastructure build-out is the only governor on how wide this gets.
What to watch:
- Hormuz shipping traffic: any sustained reopening collapses the JKM-Henry spread faster than production can adjust, and Qatari cargoes flood back into Asia within weeks.
- New train startups: Corpus Christi Train 6 expected this summer adds another 0.2 bcfd of nominal capacity; Golden Pass Trains 2 and 3 ramp through 2027, each tightening domestic balances.
- Henry Hub curve inversion: if domestic prices push above $4.00 and hold, production response accelerates and the export economics start to erode at the margin—watch the front of the curve.