When the war between the US and Iran started, analysts focused on Iranian contributions to the global economy as one of the largest exporter of oil and gas, it would have an effect. After a few days, the Iranians shot missiles and drones to every country but Turkey and since they are in the Middle East oil and gas infrastructure was targeted. When infrastructure is attack, it can be fixed but it will take some time to be fully operational.

When Iran closed off most of the tanker traffic on the Strait of Hormuz, the countries which produced the oil filled up their storage tanks and then they had to stop production. When the Strait of Hormuz opens to what is consider to be norma, it will take some time to lower the storage tanks, start the refineries and start the pumping of the oil and gas.

In an article from Reuters, shares of US liquefied natural gas (LNG) companies such as Cheniere Energy and Venture Global jumped to all-time highs. The reason Iran attacked the Qatar infrastructure.

QatarEnergy CEO Saad al-Kaabi told Reuters that Iran had knocked out 17% of the Gulf nation’s LNG export capacity. Additionally, the attacks by Iran may shut-down nearly 1/5 of its LNG output for up to 5 years. Repairs will sideline 12.8 million tons of LNG. Qatar is the world’s largest exporter of LNG, followed by the US.

Cheniere can export more than 51 million tons, while Venture Global exports 37 million tons. Cheniere sells 94% of its output under long-term contract while Venture Global keeps about 30% for the spot market.

Linking to dividend paying stocks, prices of natural gas and LNG has risen which benefits the companies but for Cheniere it is only the 6% it does not have under long term contract, while Venture Global benefits from the 30% it sells on the spot market for higher prices. Both companies can benefit if they have the capacity to sell more gas. This is why it is important to do your homework. Who benefits and how much on the upside? If LNG prices had fallen, Cheniere would benefit more because it has long-term contracts. There are always different business models in operation and as an investor you need to know what your investment company does.

There are more questions than answers, till the next time – to raising questions.