Goldman: TTF Gas Hits 105 Euros if Gulf LNG Stays Constrained

Goldman Sachs has outlined a sharp upside scenario for global gas prices, warning that the Dutch TTF benchmark and the Asian JKM index could reach 105 euros per megawatt hour and $35 per million British thermal units by the end of the year. This projection assumes that liquefied natural gas exports from the Persian Gulf do not improve significantly during the winter season, with weather conditions remaining average.

The bank’s base case remains more moderate, projecting TTF at 70 euros and JKM at approximately $25, contingent on a gradual recovery in flows through the Strait of Hormuz. According to reporting from investinglive.com, the wide gap between these two scenarios highlights that current market pricing is effectively a two-way bet on the reliability of Gulf shipping routes.

Hormuz flows dictate price divergence

The primary driver of this volatility is the status of LNG shipments through the Strait of Hormuz. Iran has claimed the strait is closed, while US Central Command reported that oil and LNG shipments hit a six-month high in the past two weeks. This conflicting information leaves the supply outlook unsettled, meaning any signal regarding loading improvements or stalls could cause rapid price movements in both benchmarks.

Oil traders are monitoring the same shipping headlines because the strait represents a shared risk for both crude and LNG markets. If flows remain constrained, the resulting price spike would not only affect gas users but also influence broader energy demand, potentially supporting coal prices where switching is feasible.

Industrial demand faces rationing thresholds

Goldman Sachs expects that most demand destruction will occur in the industrial sector, which consumes large volumes of natural gas. Direct conversations with Indian industrial users indicate that $30 per MMBtu is a critical threshold for triggering further demand cuts. This level sits between the bank’s base case of $25 and its risk case of $35, suggesting rationing would primarily impact the higher-price scenario.

In China, some industrial users may already be switching from gas to coal. In Europe, LNG importers are expected to pass high costs downstream to customers. This cost pass-through has macroeconomic implications, as European Central Bank officials have noted that surging energy costs could influence decisions on further interest rate tightening.

Weather and supply define outlook

The final price trajectory depends on the speed of Gulf LNG recovery and winter weather patterns, as all projections assume an average season. A steady improvement in Hormuz shipments would likely keep prices near the base case, while continued constraints would push markets toward the higher risk case, forcing industrial adjustments.