May 08, 2026 [Reuters]- Cheniere Energy said on Thursday that Middle East supply disruptions were tightening global LNG ‌markets and increasing competition for flexible U.S. cargoes, even as the company reported a steep quarterly net loss driven by non-cash derivative charges.

Shares slumped 5.5% after the company reported a $3.5 billion net loss for the first quarter, hurt by $4.8 billion of unfavorable variance related to changes in the value of derivative agreements linked to ​long-term LNG contracts. The company had posted a profit of $353 million in the first quarter last year.

Chief Financial Officer Zach Davis ​told analysts that adjusted net income in the quarter, excluding the non-cash derivative impact and related tax and ⁠minority-interest effects, was about $1 billion.

“We expect these non-cash unrealized mark-to-market losses to unwind over time and generate mark-to-market gains as we realize ​the intended and corresponding fixed liquefaction fees from these contracts that pass through the LNG market price exposure,” Davis said on a conference call ​after the earnings release.

Derivatives are contracts used to hedge against swings in energy prices but can entail risks when global markets become volatile. Cheniere was not alone in reporting paper losses tied to energy-market volatility, with Chevron and Exxon Mobil also hit by hedging-related impacts in the first quarter.

LNG PRICES SET TO STRENGTHEN

Chief Commercial Officer Anatol Feygin ​said the company is “astounded” that global gas prices have not risen higher with the closure of the Strait of Hormuz disrupting 100 cargoes ​a month.

He said prices could rise further in 2026 as Europe tries to fill its storage capacity heading into winter and as Asia feels the ‌effects ⁠of the physical loss of LNG cargoes from the Middle East.

“The current situation is masked by the fact that we’re in the shoulder period and the disruption of deliveries from the Strait being closed really only started to be felt a month ago,” Feygin said.

In response to tightness in the global LNG market, Cheniere and other U.S. LNG producers have sent increased cargoes to Asia and away from Europe, Feygin ​added.

PRODUCTION RISES

Cheniere – the largest LNG ​producer in the U.S. – increased ⁠output of the superchilled gas in the first quarter of the year with more of its Corpus Christi Stage 3 expansion coming on line, CEO Jack Fusco said.

The company’s Stage 3 expansion was 96.5% complete as of ​March 31, with first LNG from Train 6 expected imminently.

The Train 5 unit, part of a ​seven-train development expected to ⁠add 10 million metric tons per year of export capacity at the Corpus Christi LNG plant, began operating at full capacity in late March.

The company’s LNG revenue rose nearly 8% to $5.72 billion during the quarter, and margins on open 2027 capacity had risen to about $6-$7 per mmBtu, from below $4 in February.

Cheniere ⁠raised its ​2026 adjusted core profit forecast to between $7.25 billion and $7.75 billion – from its earlier range ​of $6.75 billion to $7.25 billion – on higher LNG production forecasts and stronger market margins.

The company said the $500 million range in guidance resulted from several unknowns and noted that a 50-cent change ​in benchmark Henry Hub prices could swing earnings by $100 million.