Goldman Sachs Raises European Gas Price Forecast on Strait of Hormuz LNG Disruptions

Goldman Sachs has sharply increased its near-term forecast for European natural gas prices, attributing the revision to persistent disruptions in liquefied natural gas (LNG) exports from the Persian Gulf. The bank now anticipates a tighter supply balance for the continent heading into the crucial winter heating season.

Delayed LNG Recovery

In a note to clients, Goldman Sachs analyst Samantha Dart stated that the bank has pushed back its timeline for the normalization of Persian Gulf LNG exports to October from a previous estimate of July. The delay is linked to ongoing tensions affecting shipping through the Strait of Hormuz, a vital chokepoint for global energy markets.

The strait handles approximately 20% of global LNG exports. According to the bank's analysis, the extended disruption will reduce global LNG supply by 4% for the remainder of the summer, equivalent to 16 million tonnes per annum.

New Forecasts and Storage Impact

This tighter supply outlook is expected to have a direct impact on European gas storage levels. Goldman Sachs now projects that Northwest European storage will be 67% full by the end of October, down from a prior forecast of 74%. Assuming average winter temperatures, storage is forecast to end the season in late March at 28% capacity.

Ad

As a result of these revised expectations, the bank has raised its price targets for Dutch TTF, the European benchmark:

• Q3 & Q4 2026: Raised to €60 and €53 per megawatt-hour (MWh), respectively, from previous forecasts of €41 and €40.
• Full-year 2027: Increased slightly to €31/MWh from €30/MWh.

Market Risks and Key Price Levels

Goldman Sachs anticipates that for the rest of the summer, TTF prices will trade near the €65/MWh threshold, a level it believes is necessary to discourage demand from Asian buyers and keep LNG cargoes flowing to Europe. The bank noted that risks to its near-term forecast are skewed to the upside.

Under a scenario where Middle East exports only normalize gradually through 2027, TTF prices could surge above €100/MWh to sufficiently curb Asian demand. Conversely, a faster-than-expected resolution in the Strait of Hormuz could see prices fall back toward the €40/MWh coal-to-gas switching level. The bank's longer-term bearish view for 2028-2029 remains contingent on the strait being fully open for shipping.