Skip to main content

Market Overview

Will Qatar Blockade Quandary Create A Catalyst For U.S. Gas Companies?

Will Qatar Blockade Quandary Create A Catalyst For U.S. Gas Companies?

For U.S. natural gas investors, Qatar’s problems may be the American natural gas industry’s opportunity. Diplomatic tensions between Qatar, the world’s largest natural gas exporter, and six Arab countries, including the United Arab Emirates and Egypt, recently came to a head over Qatar’s alleged support for terrorist organizations such as the Muslim Brotherhood and Hamas.

As a result, these six countries have pledged to implement a blockage on the Fujairah refueling port and ban all incoming vessels from Qaar or outgoing vessels traveling to Qatar.

Qatar produces 80 million metric tons of LNG annually, representing roughly 30 percent of the global LNG market.

So far, Qatar’s LNG exports haven’t been meaningfully impacted by the resolution, but tensions between Qatar and the six nations remain elevated, Height Securities analyst Katie Bays wrote on Tuesday.

“Regardless of Qatar’s assurances that the blockade will not affect LNG shipments, we believe that this unprecedented blockade casts uncertainty over Qatar’s ability to meet summer demand requirements,” Bays wrote.

Related Link: Why Peak Oil Demand Is Still At Least 20 Years Away

“This uncertainty creates an opportunity for the U.S. to prove its mettle among risk-averse Asian LNG buyers heading into the tight summer demand season.”

With the reliability of Qatar’s LNG exports in question heading into the summer demand season, risk-averse buyers may choose to avoid Qatar all together in 2017, Bays wrote.

So far, U.S. natural gas investors haven’t experienced much of a tailwind from the Qatar drama. Here’s a breakdown of how some popular natural gas plays have performed in the past month:

  • VelocityShares 3X Inverse Natural Gas ETN linked to the S&P GSCI Natural Gas Index (NYSE: DGAZ): +52.9 percent.
  • Enstar Group Ltd. (NASDAQ: ESGR): +8.2 percent.
  • Xcel Energy Inc (NYSE: XEL): +2.7 percent.
  • Chesapeake Energy Corporation (NYSE: CHK): -8.0 percent.
  • United States Natural Gas Fund, LP (NYSE: UNG): -14.8 percent.
  • VelocityShares 3X Long Natural Gas ETN linked to the S&P GSCI Natural Gas Index (NYSE: UGAZ): -39.2 percent.

Latest Ratings for CHK

Apr 2021RBC CapitalInitiates Coverage OnOutperform
Feb 2021Wells FargoInitiates Coverage OnOverweight
May 2020UBSMaintainsSell

View More Analyst Ratings for CHK
View the Latest Analyst Ratings


Related Articles (CHK + DGAZ)

View Comments and Join the Discussion!

Posted-In: Analyst Color Long Ideas News Emerging Markets Specialty ETFs Futures Commodities Politics Best of Benzinga

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at