Oil prices are sending shock waves through the market and giving energy stocks a much-needed boost. A similar, but different, story is emerging with natural gas. The spot price of natural gas has been down since the conflict with Iran began. The United States Energy Administration cites milder-than-expected February weather that left more gas in storage. Plus, the rise in oil prices is driving up production in the Permian basin, which produces more associated natural gas as a byproduct.
However, there are geopolitical concerns that could mean higher natural gas prices even if the shock to oil prices is transitory. It’s all about what’s happening in the Strait of Hormuz. Approximately 20% of liquefied natural gas (LNG) flows through the Strait. Most of this comes from Qatar.
