Natural Gas Prices Could Double! Goldman Sachs Warns Strait Disruption Brewing Bigger Crisis

Although global oil and gas markets have already surged sharply due to the Strait of Hormuz disruption, Goldman Sachs analysts warn that the real natural gas crisis is still brewing.

 

Samantha Dart, co-head of Global Commodities Research at Goldman Sachs, warned that if the Strait of Hormuz remains blocked, natural gas prices could rise another 50% to 100% from current levels, as markets will be forced to curb demand much more aggressively.

 

So far, the price spike from gas shortages has only led to a limited shift to alternatives like coal, rather than the deep demand destruction needed to rebalance the market.

 

Meanwhile, a warmer-than-usual winter in China reduced its natural gas imports, sending extra supplies onto global markets and providing some short-term relief. This is also a key reason why European gas prices, despite rising, have not climbed as much as expected.

 

However, the positive effect of this temporary relief will fade gradually, forcing markets to confront fundamental constraints. With little spare capacity in global natural gas production, another crisis comparable to the crude oil shock is set to unfold.

The Crisis

Unlike oil, the natural gas market is highly seasonal. Countries build inventories from April to October to meet peak winter demand. That means supply disruptions now could force a sharp price rally months before the Northern Hemisphere winter if flows are not restored in time.

 

Dart noted that whatever impact the U.S.-Iran conflict or the Hormuz disruption has on current gas inventories, the market must fully offset it by the end of October.

 

Yet Qatar, a critical supplier to Asia, has already reported a production gap. Its energy giant’s liquefied natural gas (LNG) infrastructure suffered severe damage, with full capacity recovery expected to take three to five years.

 

Dart explained that fixing the facilities would not take three years. What Qatar Energy really means is that the two LNG trains are so badly damaged they will need to be rebuilt from scratch. Meanwhile, the U.S. — the world’s top LNG exporter — also lacks sufficient spare capacity to quickly fill Qatar’s shortfall.

 

Goldman Sachs also warned in an earlier report this month that Europe’s limited current gas risk premium is mainly due to lower LNG imports in Asia, especially China. But as Chinese demand recovers and Asian LNG prices trade above European levels, cargoes will increasingly divert to Asia, potentially tightening European supplies.

 

The bank added that if the LNG supply shock persists at the current scale beyond April, it expects Dutch TTF futures to test a higher range of €75–€100 per megawatt-hour.

 

As of Thursday, Dutch TTF stood at €46/MWh, up 44% from pre-conflict levels.