Goldman Sachs Predicts Potential Surge in Gas Prices Amid LNG Export Concerns

Goldman Sachs has issued a warning regarding the potential for significant increases in gas prices in Europe and Asia this winter. The investment bank forecasts that if liquefied natural gas (LNG) exports from the Persian Gulf do not improve, the Dutch Title Transfer Facility (TTF) and the Japan Korea Marker (JKM) could reach 105 euros per megawatt hour and $35 per million British thermal units (MMBtu) by the end of the year. This projection assumes average winter weather conditions and contrasts sharply with Goldman’s base case scenario of 70 euros and approximately $25, which anticipates a gradual recovery in LNG flows through the Strait of Hormuz.

The disparity between these scenarios highlights the uncertainty surrounding LNG shipments from the Gulf region. While Iran claims to have closed the strait, the U.S. Central Command reported that oil and LNG shipments through it recently reached a six-month high. This conflicting information leaves the outlook for gas flows unclear, which could have significant implications for energy prices and demand.

Goldman expects that the industrial sector will bear the brunt of demand destruction if prices rise, particularly as conversations with Indian industrial users indicate that $30 per MMBtu may trigger further reductions in gas consumption. Additionally, some industrial users in China are reportedly switching from gas to coal due to rising costs. The bank also noted that European LNG importers are likely to pass on high LNG costs to consumers, which could influence inflation and monetary policy discussions within the European Central Bank.

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Source: KLEA News