European gas could jump 130% on Hormuz disruption: Goldman Sachs

By Keira Wright

 

European natural gas prices could more than double if shipping through the Strait of Hormuz is halted for one month, according to Goldman Sachs Group Inc.

 

Benchmarks in Europe and Asia have hardly priced in risk premiums associated with Iran, Goldman analysts including Daan Struyven said in a note dated March 1. About a fifth of the world’s liquefied natural gas, mainly from Qatar, goes through the chokepoint and a month-long halt could see European prices and spot Asian liquefied natural gas surge 130% to $25 per million British thermal units, they said.

 

“A hypothetical longer disruption of natural gas supply transit through the Strait of Hormuz lasting more than two months would likely lift European natural gas prices above €100/MWh ($35/mmBtu) to trigger more significant global gas demand destruction,” the analysts said.  

 

 

However, the impact on US natural gas would likely be limited, according to Goldman. The nation is a large net exporter of the superchilled fuel while liquefaction plants typically operate at capacity, giving little scope for them to increase shipments.