The business of US-Saudi diplomacy you’ve been missing

Why are NVIDIA’s robots sitting like this? The answer is alarming. (from Behind the Markets)

What’s behind the US-Saudi Arabia diplomacy?

$120 billion in deals. 20 million tonnes of LNG capacity. A defense alliance that could reshape global energy flows.

The numbers coming out of Washington aren't just big, they're structural. 

Saudi Aramco isn't buying American LNG terminals for next quarter's earnings call. 

This is about locking down decades of supply chains, AI infrastructure, and geopolitical leverage while the U.S. doubles its export capacity by 2029.

And if you're holding energy ETFs or wondering whether natural gas infrastructure deserves a spot in your portfolio, the answer just got a lot clearer.

In 2025, Aramco, through its group companies, signed 51 deals with U.S. companies. 

The Saudi energy giant committed to roughly $120 billion in potential investments spanning LNG terminals, AI chip partnerships, defense equipment, and critical mineral supply chains.

But here's the thing most coverage missed: the LNG deals aren't optional anymore. They're operationally necessary.

Aramco needs 20 million tonnes per annum of LNG capacity by 2030 to hit its diversification targets under Vision 2030. Right now, they're at 4.5 million tonnes in active development. That leaves a 15.5 million tonne gap—roughly equivalent to building 8-10 major LNG facilities from scratch.

So when Aramco signs a deal with Commonwealth LNG for 1-2 million tonnes annually, or locks in 1.2 million tonnes from NextDecade's Rio Grande project, these aren't speculative bets. They're filling capacity requirements that Saudi Arabia physically needs to replace crude oil in domestic power generation.

Let's break down what Saudi Arabia is actually buying:

Real on-the-ground numbers: U.S. LNG export capacity is set to grow from 13.9 billion cubic feet per day in 2024 to 24.3 bcf/d by 2028. That's a 75% increase in four years. Aramco is pre-positioning to capture a meaningful slice of that expansion.

Aramco didn't just buy chips. They bought an entire digital ecosystem:

The strategic logic: Saudi Arabia is building 500 megawatts of AI computing capacity over five years. That's enough to run advanced reservoir modeling, optimize production across thousands of wells in real-time, and develop proprietary large language models for industrial applications.

But here's what matters for investors: Washington controls the export licenses for these chips. By tying Aramco's digital transformation to U.S. hardware suppliers, the Trump administration gained leverage over Saudi strategic decisions outside the traditional oil-for-security framework.

On November 19, 2025, President Trump designated Saudi Arabia as the 20th Major Non-NATO Ally of the United States. The announcement came with concrete deliverables:

That gap matters more than you might think. Previous administrations blocked advanced weapons sales to Gulf states over China access concerns. Trump's team bet that deeper economic integration—$120 billion worth—creates enough sunk-cost interdependence to manage those risks.

When the world's largest oil company commits $30+ billion to U.S. LNG projects, they're not making a directional bet on natural gas prices. They're validating the entire supply chain.

Here's why that matters: LNG terminal developers need 70-80% of capacity pre-sold before reaching Final Investment Decision (FID). 

Major projects like Commonwealth's 9.5 mtpa facility were stuck at ~30% capacity coverage before the Aramco deal. Now they're closer to financing thresholds.

For investors in midstream infrastructure, this de-risks projects that were borderline bankable six months ago. Companies like Cheniere Energy (LNG), which already operates major Gulf Coast terminals, benefit indirectly as new capacity comes online and validates long-term demand.

The International Energy Agency projects 7% LNG supply growth in 2026, the strongest since 2019. But demand is what's interesting.

Asia-Pacific consumption is expected to rise 2% in 2026, led by China and India. Meanwhile, U.S. benchmark prices hit $5 per MMBtu in December 2025, the first time in three years, on LNG export strength and cold weather demand.

Aramco's purchases lock in long-term offtake agreements priced off Henry Hub benchmarks, giving them exposure to U.S. natural gas pricing rather than oil-linked contracts. That's a hedging strategy against crude volatility, but it also means sustained LNG exports could structurally pull U.S. gas prices higher over time.

The Energy Information Administration projects dry gas production will hit 107.4 bcf/d in 2026, up from 103.2 bcf/d in 2024. Most growth comes from Haynesville Shale (41% increase) and Marcellus Shale (9% increase), both feeding Gulf Coast export terminals.

Energy markets haven't priced in strategic alliances for a decade. China got cheap Russian gas. Europe scrambled after Ukraine. The U.S. focused on shale independence.

Now? Saudi Arabia just spent $120 billion to ensure its energy transition runs on American technology, its LNG supplies come from Louisiana and Texas, and its defense systems integrate with U.S. platforms.

That's not a trade. That's strategic alignment with a 20-30 year time horizon. And it creates a geopolitical put option for U.S. energy exports: if global markets get disrupted, Aramco's committed demand provides a floor.

Investors have several ways to capture exposure to this trend:

Woodside Energy: Louisiana LNG project with potential Aramco equity stake

Performance Context: LNGX gained 5.7% YTD through mid-January 2026, while UNG recovered 6.4% since mid-October 2025 after prolonged weakness. 

The key difference: equity-based funds capture operational leverage from rising production and export capacity, while futures-based funds track commodity prices directly.

Major U.S. firms with Aramco contracts:

AMLP (Alerian MLP ETF): Midstream infrastructure with tax-advantaged structure

Critical Detail: All contracts price off Henry Hub benchmarks, giving Aramco protection against oil-linked LNG volatility while exposing them to U.S. natural gas market dynamics.

The Saudi-U.S. energy realignment isn't a quarterly story. It's a multi-year structural shift.

Near-Term (2026)

Natural gas prices could remain range-bound as production growth matches demand. The EIA forecasts Henry Hub averaging $3.50/MMBtu in 2026—down 2% from 2025—before surging 30% to $4.60/MMBtu in 2027 as LNG export capacity comes online.

That creates a potential accumulation phase for natural gas equities and infrastructure plays before the next price leg higher.

As U.S. LNG export capacity grows 75% from 2024 levels, producers in Haynesville and Marcellus Shales will need to ramp output. Midstream operators building pipelines, compression stations, and export terminals will capture margin expansion.

Aramco's committed offtake agreements reduce project risk for developers trying to reach Final Investment Decision, potentially accelerating capital deployment.

If Aramco hits its 20 mtpa LNG capacity target, they'll rank among the world's top-three LNG players alongside Qatar and Australia. That permanently shifts global gas trade flows and cements U.S. infrastructure as critical to Middle Eastern energy security.

For investors, this isn't about timing natural gas price spikes. It's about recognizing that U.S. LNG infrastructure just became strategically indispensable to one of the world's most influential energy producers.

No investment thesis is complete without downside scenarios:

Regulatory Delays: Rio Grande LNG recently faced permit challenges. Commonwealth needs Final Investment Decision approval. Delays push cash flows further out and increase project risk.

Price Volatility: Henry Hub prices can swing dramatically on weather and storage levels. Aramco's contracts provide offtaker stability for developers, but equity investors still face commodity exposure.

Geopolitical Shifts: If U.S.-Saudi relations deteriorate, long-term contracts could face political pressure. However, the $120 billion in sunk costs and Major Non-NATO Ally designation suggest both sides have incentive to maintain the partnership.

China Access Concerns: F-35 sales to Saudi Arabia sparked intelligence community warnings about potential technology transfer to China (Saudi Arabia's largest trading partner). Export controls on advanced chips could tighten if those concerns intensify.

Execution Risk: MOUs aren't contracts. Of the $120 billion in announced deals, actual equity stakes, shovel-ready projects, and binding agreements will determine real capital deployment.

Saudi Aramco just made a $120 billion statement about where global energy is heading: toward U.S. LNG, AI-driven operations, and strategic supply chain integration that doesn't run through Beijing.

For investors, the opportunity isn't in trying to time natural gas price moves. It's in recognizing that U.S. energy infrastructure just secured multi-decade demand visibility from a counterparty with the balance sheet and strategic need to honor commitments.

The ETFs capturing this trend: LNGX for pure-play natural gas exposure, USNG for midstream infrastructure, or direct equity positions in Cheniere, NextDecade, and major service providers, offer ways to position for what's coming.

When the world's largest oil company spends more than a decade's worth of free cash flow building ties to U.S. energy and technology, that's not a transaction. That's a realignment.

And realignments create investment cycles that last years, not quarters.

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Disclaimer: This is not financial or investment advice. Do your own research and consult a qualified financial advisor before investing.