Goldman warns Gulf LNG squeeze could send European gas to €105, revive energy shock risk
Goldman Sachs has warned that constraints on liquefied natural gas (LNG) supplies from the Gulf could drive Europe’s TTF benchmark to €105 and Asia’s JKM price to $35. That kind of spike would revive fears of an energy shock, hitting households, heavy industry, and governments still trying to recover from the last gas crisis.
Europe and Asia thought they had gained some breathing room on gas. A new warning from one of the world’s biggest investment banks suggests that may be wishful thinking.
Goldman Sachs has cautioned that supply constraints affecting liquefied natural gas exports from the Gulf could send benchmark prices sharply higher, with Europe’s TTF contract potentially jumping to around €105 per megawatt‑hour and Asia’s JKM price climbing to roughly $35 per million British thermal units. The bank framed this as a supply shock risk, not yet a reality, but one that governments and traders now have to treat as a live scenario.
Those price levels would not quite match the absolute peaks seen in the early months after Russia’s full‑scale invasion of Ukraine, but they would represent a severe tightening compared with more recent trading ranges. For households, it would mean higher heating and electricity bills just as inflation relief was finally filtering through. For energy‑intensive industries—chemicals, steel, cement, fertilizers—it could again force production cuts, relocations, or permanent closures, especially in countries like Germany, Italy, and the Netherlands that remain heavily reliant on imported gas.
The warning centers on LNG flows from the Gulf, a region that has become even more crucial since Europe slashed pipeline gas imports from Russia. Qatar and other Gulf producers have stepped in as major suppliers, shipping super‑cooled gas by tanker. Any constraints—whether from capacity bottlenecks, maintenance issues, weather disruptions at export terminals, or security problems along shipping routes—can quickly ripple through a global market that has limited slack.
For shipping companies and insurers, a Gulf‑linked LNG squeeze would force hard choices about routes, contract terms, and risk premiums. Tanker operators might seek higher freight rates to cover potential delays or diversions; insurers could push up the cost of coverage in sensitive waterways. Even without a single warship changing course, uncertainty alone can make LNG more expensive and harder to secure on short notice.
Strategically, the scenario Goldman describes would re‑expose the fragility of Europe’s post‑Ukraine energy strategy. The continent diversified away from Russian pipelines but did so by tying itself more tightly to seaborne LNG, much of it funneled through chokepoints like the Strait of Hormuz and the Suez Canal. A squeeze in Gulf LNG supplies doesn’t have to be total to matter; if buyers begin to doubt that cargoes will arrive on time, they start bidding more aggressively on every available molecule.
Asian buyers are pulled into the same contest. Higher JKM prices would strain budgets in countries like Pakistan, Bangladesh, and India that already struggle to afford spot cargoes when the market tightens. For wealthier economies such as Japan and South Korea, a price spike means difficult decisions between paying more for gas, switching to coal and oil with higher emissions, or leaning harder on nuclear and renewables. The competition between Europe and Asia is not theoretical—during the last crisis, some developing countries were literally priced out of the market.
One line captures the stakes: LNG doesn’t have to stop flowing for the world to feel a crunch; it just has to become uncertain enough that everyone scrambles to lock in supply first.
In the near term, markets will watch Gulf production and export data, shipping congestion in key LNG terminals, and any signs of infrastructure outages or security incidents along major routes. Policy signals from European governments—such as moves to top up storage faster, subsidize vulnerable industries, or cap consumer prices—will show how seriously they treat the risk of another gas shock as winter approaches. The reaction from Asian state buyers, especially in long‑term contract tenders, will offer an early gauge of how intense the next scramble for LNG could become.
Sources
- OSINT