Goldman Sachs Warns Gas Prices May Soar to Historic Highs if LNG Exports Remain Constrained

Goldman Sachs has warned that natural gas prices in Europe and Asia may surge to historic highs if liquefied natural gas (LNG) exports from the Persian Gulf remain constrained. The bank's base case estimates that the Dutch Title Transfer Facility (TTF) and Asian JKM benchmarks will reach 70 euros per megawatt hour (MWh) and $25 per million British thermal units (MMBtu), respectively, by year-end. However, if Hormuz LNG flows do not improve significantly this winter, Goldman expects these prices to climb sharply, reaching 105 euros per MWh and $35 per MMBtu.

The bank cites two scenarios: its base case assumes a gradual improvement in Hormuz LNG flows, while the risk case assumes a stalled recovery or a cold spell. Traders will closely monitor loadings data, attacks on Gulf energy infrastructure, and regional talks on shipping routes to gauge the likelihood of a gas price spike.

Goldman notes that most demand destruction would come from industrial users, which consume large volumes of natural gas. The bank's direct conversations with Indian industrial users suggest that $30 per MMBtu could be an important threshold for triggering additional cuts in industrial gas demand. Some gas-to-coal switching may already be taking place among Chinese industrial users.