LONDON — Goldman Sachs has revised its forecasts for European natural gas prices upward, warning that escalating geopolitical tensions in the Middle East and growing risks to global liquefied natural gas (LNG) supplies could keep prices elevated in the coming months.
The investment bank increased its outlook for the Dutch Title Transfer Facility (TTF)—Europe’s benchmark natural gas contract—after heightened concerns over supply disruptions linked to the conflict involving Iran and the strategic Strait of Hormuz. Analysts said the market has begun pricing in greater geopolitical risk as uncertainty over LNG exports intensifies.
According to Goldman Sachs, the average TTF price forecast for April was raised to €55 per megawatt-hour (MWh), up from €36/MWh, while the second-quarter average forecast increased to €45/MWh from €36/MWh.
Supply Risks Drive Outlook
The revised forecast follows disruptions to LNG production in Qatar and mounting concerns that any prolonged interruption to shipping through the Strait of Hormuz could significantly tighten global gas supplies. Around one-fifth of the world’s LNG trade passes through the strategic waterway, making it a critical artery for energy markets.
Goldman Sachs estimates that if LNG shipments through the Strait of Hormuz were halted for a month, European benchmark gas prices could more than double, potentially rising by as much as 130%. A longer disruption could push prices above €100/MWh, levels last experienced during Europe’s 2022 energy crisis.
Europe Faces Renewed Energy Concerns
Although Europe imports only a modest share of its gas directly from the Middle East, disruptions would increase global competition for LNG cargoes, forcing European buyers to compete more aggressively with Asian importers. The situation is further complicated by relatively low gas storage levels and stronger-than-expected demand following last winter.
Goldman Sachs also warned that persistently higher energy prices could weigh on European economic growth and industrial output if supply constraints continue. The bank expects higher energy costs to reduce European manufacturing production over the medium term, highlighting the broader economic consequences of prolonged geopolitical instability.
While Goldman Sachs’ baseline scenario assumes tensions will gradually ease and supply routes will normalize, the bank stressed that risks remain tilted to the upside as long as uncertainty surrounding the Middle East conflict persists.
Source: Patronlar Dünyası/ Prepared by: İlayda Gök