Goldman Sachs: Qatar LNG supply disruption exceeds expectations; exports may "drop to zero" until late March and fully recover only by May

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The shocks to the global liquefied natural gas (LNG) market caused by geopolitical conflicts in the Middle East are exceeding previous expectations. Goldman Sachs warns that as a key global supplier, Qatar’s LNG exports are facing a much longer halt, creating a massive supply vacuum that will rapidly tighten the global natural gas market balance and force a structural increase in short-term gas prices.

According to statements last week by Qatar’s Minister of Energy, resuming operations requires a complete stop to hostilities in the region, followed by several weeks or even months to reach full production. According to ZF Trading Desk, Goldman Sachs has significantly revised its export timeline, now expecting Qatar’s LNG exports to remain at “zero” until late March, with a slow ramp-up of capacity for most of April, and only fully restored to a normal level of 79 mtpa (million tons per annum) by May.

Sustained disruption on the supply side has directly driven up pricing logic in the market. Goldman Sachs has comprehensively raised its natural gas price forecasts for Q2 2026, increasing the European TTF benchmark forecast from €45/MWh to €63/MWh (about $22/MMBtu), and the Asian JKM benchmark forecast from $16/MMBtu to $23/MMBtu. This adjustment not only exceeds current forward curve pricing but also highlights fierce competition for alternative gas sources between the two major consumer markets.

With 20% of global LNG supply suddenly halted, the knock-on effects have begun to emerge in the industry. To balance the market, European natural gas prices have been forced high enough to trigger fuel switching, while some price-sensitive emerging Asian markets are already showing early signs of industrial gas demand destruction.

Shutdown timeline delayed, Europe faces storage tightening pressure

Goldman Sachs analysts Samantha Dart, Laura Cyr, and Frederik Witzemann noted in a report released on the 8th that, due to a protracted supply disruption, annualized deliveries of Qatari LNG in March and April are expected to plunge to 18 mtpa and 43 mtpa respectively, far below the pre-conflict forecasts of 74 mtpa and 76 mtpa.

This supply shock will directly cause European market imports to plummet. Goldman Sachs expects Northwest Europe’s LNG imports in March and April to fall to 207 mcm/d and 195 mcm/d respectively, significantly down from prior expectations. The report emphasizes that although recent mild weather in Northwest Europe has partially offset the impact of lower LNG imports, without any additional offsetting mechanisms, every two weeks of full interruption of Qatari LNG supply will tighten Northwest Europe’s gas storage by nearly 4% of total capacity.

Gas prices enter ‘gas-to-oil’ zone, Asian premium attracts cross-basin arbitrage

To fill the huge supply gap, European natural gas prices (TTF) must remain higher for a longer period to trigger fuel switching. Goldman Sachs points out that the bottom of the current “gas-to-oil” switching range is €55/MWh (fuel oil) and the top is €80/MWh (distillates). Goldman Sachs has raised its TTF price forecasts for April and May to €75/MWh and €70/MWh, meaning gas prices have fully entered the oil substitution zone, prompting the market to turn to hard coal and oil products to offset lost European LNG imports.

Meanwhile, to fill missing Qatari supplies, the Asian market must attract extra LNG cargoes from the Atlantic Basin. For this, Goldman Sachs raised its JKM price forecasts for April and May to $29 and $25/MMBtu. By maintaining a positive JKM-TTF spread, Asia can effectively guide cross-basin arbitrage flows. Additionally, market reports cited by Goldman Sachs indicate that in India, Pakistan, and Bangladesh, there are already rumors and evidence of industrial demand destruction.

Tail risks are two-sided, U.S. market relatively insulated

Around the current base case forecast, Goldman Sachs considers the market faces two-way risk. If energy flow disruptions persist beyond April (e.g., if the Strait of Hormuz remains closed longer than expected), TTF and JKM prices may need to approach an extreme high of €100/MWh to trigger broader industrial demand destruction and preserve enough gas for the next winter. Conversely, if the conflict deescalates quickly, TTF prices may rapidly fall to about €40/MWh, the coal-switching band.

Notably, although global gas markets are in turmoil again, the U.S. market remains largely unaffected. Goldman Sachs reiterates that while U.S. Henry Hub natural gas prices occasionally react emotionally to the TTF movements, fundamentally, U.S. gas prices will stay insulated from surging European and global LNG prices because the U.S. is a net LNG exporter, and there is essentially no idle export capacity to increase shipments.

Long-term expansion plan set back, but bearish outlook for longer term unchanged

The conflict has not only impacted the current spot market but has also disrupted Qatar’s long-term capacity expansion. Due to the current construction halt, Goldman Sachs delayed the expected commissioning date of Qatar’s North Field East (NFE) Train 1 from October 2026 to January 2027, with the following seven trains also likely to face similar delays.

This adjustment means that, between 2027 and 2030, annual global LNG supply increases will be reduced by 2.8 mtpa. Due to this minor adjustment, Goldman Sachs slightly raised its gas price forecast for 2027, with TTF now expected at €23/MWh and JKM at $8.30/MMBtu. However, the bank emphasizes that the current tightening shock has limited impact on long-run forward balances, and this does not alter its extremely bearish view on 2028 and 2029 global gas prices, for which long-term forecasts remain unchanged.

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The above content is from ZF Trading Desk.

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