Gas shock for Europe: Goldman Sachs warns of a possible price spike for 130%
European natural gas prices could more than double if traffic through the Strait of Hormuz is blocked for at least one month. This was reported by Bloomberg with reference to analysts' forecasts Goldman Sachs.
Details of the forecast
The bank estimates that about a fifth of the world's liquefied natural gas (LNG) exports pass through the Strait of Hormuz, mainly from Qatar.
In case of a one-month transit suspension:
European gas prices could jump by up to about 130%
Asian spot LNG prices will also rise sharply
The benchmark can reach approximately $25 per MMBtu
Analysts note that the market has hardly priced in the «Iranian risk premium» yet.
Why the risk is so high
The Strait of Hormuz is a key energy hub in the world. About 20% of global oil and gas flows pass through it, so any disruptions have an immediate impact on prices.
According to Goldman Sachs, the gas market may react even more strongly than the oil market due to limited opportunities to quickly increase alternative supplies.
What will happen in case of a longer blockade
The bank warns that if the outage lasts for more than two months, European prices could exceed €100/MWh, This could trigger a serious drop in global gas demand.
At the same time, the impact on the US market is expected to be limited, as the country is a major net exporter of LNG.
Context.
Energy risks have risen sharply amid tensions between Iran, the US and Israel. Concerns about shipping safety are already forcing some tankers to change routes or stop near the Strait.
Analysts warn that even short-term disruptions could trigger a new wave of energy turbulence in Europe, especially against the backdrop of Russia's war against Ukraine and the EU's dependence on LNG.
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