Goldman: Asian and European LNG Prices Could Skyrocket by 130%
The ongoing conflict in the Middle East is causing significant delays in LNG shipments through the Strait of Hormuz, a critical waterway for global energy trade. This disruption is putting immense pressure on spot LNG prices in Asia and Europe.
Despite the Strait of Hormuz not being officially closed, major shipping companies, oil and gas firms, and traders have effectively halted traffic in this narrow passage between Iran and Oman. According to vessel tracking data, at least a dozen empty tankers have recently diverted from the eastern side of the strait.
The impact of these delays on LNG shipments from Qatar and the United Arab Emirates (UAE) could lead to a dramatic surge in natural gas prices in both Europe and Asia. Goldman Sachs analysts predict that a month-long halt to LNG exports via the Strait of Hormuz would cause Asia's spot LNG price to skyrocket by 130%, reaching $25 per million British thermal units (MMBtu).
Qatar, the world's second-largest LNG exporter after the United States, contributes approximately 20% of global supply, all of which transits the Strait of Hormuz, according to Kpler data.
While the risk to LNG shipments hasn't received as much attention as the risk to oil supply, it is very real. Amena Bakr at Kpler highlighted the structural vulnerability of Qatar's position as a transit-dependent LNG exporter, noting that Israel's reduced production from its offshore fields and disrupted energy tankers in the Gulf further exacerbate the situation.
ING's commodities strategists, Warren Patterson and Ewa Manthey, emphasized the impact on European and Asian LNG prices, stating that the recent ramp-up in LNG export capacity, particularly from the US, may not be sufficient to counteract potential losses from the Persian Gulf.
This situation underscores the critical role of the Strait of Hormuz in global energy markets and the potential for significant price fluctuations in the face of geopolitical tensions.
