MW Here's the long-term case for investing in producers of oil and natural gas

By Philip van Doorn

The Iran conflict underscores U.S. energy producers' advantages, especially for exports of liquefied natural gas

Cheniere Energy, whose Sabine Pass plant in Cameron, La., is shown here, is the largest U.S. producer and exporter of liquefied natural gas.

Traders might react to any scrap of information day by day, but committed long-term investors can take advantage of lasting trends.

Prices for front-month oil futures have been up and down almost daily. West Texas Intermediate crude oil (CL00) and Brent crude (BRN00) fell hard on Monday, rose Tuesday, declined Wednesday, climbed Thursday and early Friday were up again. The price action coincided with headlines pointing to or away from a peace deal between the U.S. and Iran.

But Matt Gertken, BCA's chief political strategist, made an unusually strong case for investors to "take a cyclically defensive outlook." Even if Iran decides to negotiate seriously with the U.S. over the next week, the U.S.'s "lower threshold for economic pain suggests Iran will not implementtotal denuclearization," he wrote in a note to clients on Thursday.

This means that if the fighting ends soon "the war will re-escalate around the midterm election, even if investors are lucky enough to avoid a market meltdown in April," Gertken concluded.

And disruptions to the supply of liquefied natural gas, along with rising demand, have improved the setup for U.S. producers and exporters - a trend that might last for decades, with increasing cash flow funding rising dividends and buybacks that boost earnings per share and support stock prices.

'There is an assumption Qatar will come back online and continue with its growth plans. I just think it is going to be very difficult to justify a 20-year contract with Qatar, for any buyer.' Simon Lack, SL Advisors

Three energy-industry experts explain how the oversupply narrative has flipped

WTI was trading for $96.26 a barrel early Friday, up 68% from $57.42 at the end of 2025, while Brent traded for $103.50, up 70% from $60.85 at the end of last year.

Simon Wong, a portfolio manager at Gabelli who focuses on the energy space, told MarketWatch that it might be more useful to look at the Dubai crude price, with May contracts priced at $124.71 a barrel early Friday after rising above $150 on March 20, according to LSEG, or the Oman benchmark, which moved even higher last week.

Qatar has been the largest global supplier of liquefied natural gas, but the U.S., led by Chenier Energy (LNG), has been building out its production and export capability as demand has risen in Europe and Asia.

Cheniere "was in a good position coming into the year," despite an oversupplied market, because the company had contracted about 95% of its production going out 10 years, "on a take or pay basis," Wong said. That means Cheniere gets paid even if buyers decide not to take delivery.

Those contracts were made at prices below current prices, Wong said. But Cheniere's stock was up 50% for 2026 through Thursday. Wong also expects EQT $(EQT)$ and Expand Energy $(EXE)$ to benefit from the Qatar supply disruption, he said.

Iran's attack against Qatar's liquefied-natural-gas production and export facilities damaged two of that country's 14 "trains," which cool natural gas for transportation as a liquid. This has caused Qatar to suspend all of its liquefied-natural-gas exports temporarily. QatarEnergy expects it to take three to five years to restore full production and export capability.

Front-month natural-gas contracts (NG00) traded in New York early on Friday for $3.04 per million British thermal unit, up from $2.859 on Feb. 27, a day before the U.S. and Israel attacked Iran, but down a bit from $3.13 at the end of 2025. The U.S. price movement has been relatively subdued, reflecting supply and cost advantages.

Adam Meyers, the senior research analyst for energy and basic materials with ClearBridge Investments (a unit of Franklin Templeton), said during an interview with MarketWatch that "the U.S. and international markets are interrelated" when it comes to natural-gas pricing.

Continuous front-month contracts for Dutch TTF natural gas (TTFC00) settled at EUR55.545 ($63.88) per megawatt-hour (MWh) on Thursday, up 97% from EUR28.161 at the end of 2025.

"If you think about midcycle, historically 18 to 22 euro per MWh is where we have been," Meyers said. "Could that reset higher to 30 to 40? Certainly."

"I do not expect us to go back to the same oversupplied liquefied-natural-gas narrative that had been a bear case for Cheniere," Meyers said. He said he expects the company to "add accreditive growth projects backed by long-term agreements of 15 to 20 years."

"Right now about 85% of Cheniere's cash flow is contracted, with 15% exposed to this international spread" between TTF and U.S. natural-gas prices, Meyers said.

Wong called Cheniere "a well-managed company with a strong balance sheet."

Meyers pointed to Cheniere's "attractive and recurring cash-return program through dividends and buybacks."

Getting back to oil, Meyers wrote in a note to clients on March 11 that producers such as "ConocoPhillips $(COP)$, Exxon Mobil (XOM), Chevron $(CVX)$, Diamondback Energy (FANG) and Permian Resources $(PR)$ stand out for their ability to produce free cash flow at lower crude prices, their conservative balance sheets, and their having the most attractive production acreage - positioning them to generate durable cash flow both at lower prices and in sustained higher-price regimes."

For the shorter term, Wong warned that there might be items affecting quarterly profits for some U.S. producers when first-quarter and second-quarter earnings results are announced. "Exxon owns part of the two trains damaged in Qatar," he said. Wong also cited Chevron's operations in the Middle East and eastern Mediterranean, along with Occidental's operations in Abu Dhabi and APA's $(APA)$ in Egypt, as potential concerns.

Then again, oil refiners, such as Valero Energy $(VLO)$ and Phillips 66 (PSX), "will make money hand-over-fist" with higher fuel prices, Wong said.

When asked whether this year's price increases for natural-gas producers and pipeline operators might make for a rather expensive proposition for investors, Simon Lack, managing partner at SL Advisors, said that "for the sector broadly, you have dividend yields of around 5%," which are attractive when short-term interest rates are between 3.5% and 4%.

SL Advisors subadvises the Catalyst Energy Infrastructure Fund MLXAX. The firm is also the index provider for the Pacer American Energy ETF USAI. That exchange-traded fund tracks the American Energy Infrastructure Index that is designed to capture the performance of U.S. operators of pipeline, storage and export facilities for refined fuels and liquefied natural gas.

"This is a world of long-term contracts, but Qatar is now a less reliable supplier," Lack said. "There is an assumption Qatar will come back online and continue with its growth plans. I just think it is going to be very difficult to justify a 20-year contract with Qatar, for any buyer."

Lack also said that worries over a glut of natural gas had been "pushed several years back" and that he saw a long path for market growth because "it is tremendously versatile, always there and not weather-dependent."

Don't miss: This commodities strategy can protect you from inflation, scarcity and even price declines

-Philip van Doorn

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March 27, 2026 11:01 ET (15:01 GMT)

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