European natural gas prices are expected to rise in the second quarter as supply disruptions and changing liquefied natural gas (LNG) trade flows tighten the regional market, according to Goldman Sachs.
The bank estimates that around 80 million tonnes per annum (mtpa) of LNG supply—approximately 19% of global output—is currently offline. This follows the disruption of shipments through the Strait of Hormuz and the shutdown of a major LNG production facility in Qatar.
Goldman Sachs strategists noted that LNG shipments through the Strait of Hormuz have effectively halted since the early stages of the Iran-related conflict, significantly impacting global supply dynamics.
Despite relatively stable storage levels in northwest Europe—supported by mild weather and continued LNG imports—market conditions are expected to shift. Seasonal demand is set to increase, while LNG cargoes are increasingly being redirected toward Asia, tightening Europe’s supply balance.
At the same time, rising gas prices have already triggered fuel switching from gas to coal, reducing demand by more than 20 million cubic meters per day across the region.
According to Goldman Sachs, this tightening environment could push prompt TTF gas prices higher. Current levels near €51 per megawatt-hour are projected to move into the €57–€84 range, where switching to alternative fuels becomes more economical.
The bank reaffirmed its second-quarter forecast for TTF prices at €63/MWh. However, it warned that prices may need to climb further if supply disruptions continue, especially if Qatari LNG exports do not resume by early May.
Options to offset the supply shortfall remain limited. Goldman highlighted that LNG routes through the Strait of Hormuz cannot easily be replaced, while additional supply from Norway or other sources is unlikely to significantly compensate for the deficit.
Market signals are already influencing global flows. Higher LNG prices in Asia have encouraged suppliers to divert shipments away from Europe, with an estimated 10 mtpa being rerouted.
Meanwhile, European gas storage levels remain critically low, standing at just 18% capacity—the lowest for this time of year since 2018. Storage injections are also expected to be minimal, with April volumes projected to be significantly below last year’s levels.
If the geopolitical situation persists, Goldman Sachs expects tightening supply conditions in Europe to act as a key driver for further gains in TTF gas prices in the near term.
