Natural Gas Comment Delayed Hormuz Normalization Forces Price Driven Fix

Commodities Research 23 August 2026 | 5:31PM EDT

Natural Gas Comment: Delayed Hormuz Normalization Forces Price-Driven Fix

n We have argued that, in the absence of an improvement in LNG exports through Samantha Dart | the Strait of Hormuz (SoH) (Exhibit 1), European gas prices (TTF) would need to Goldman Sachs & Co. LLC rise to discourage Asia LNG demand, thereby freeing incremental cargoes to be Laura Cyr sent to Europe to help manage European gas storage levels. This price-driven fix | Goldman Sachs & Co. LLC started to take shape in late July, as we recently flagged, and has since solidified. n Specifically, as TTF rallied, pulling Asia LNG spot prices (JKM) higher, Asia LNG buying interest moderated, which drove the JKM-TTF premium lower (Exhibit 2, left panel). We now see the Asia price premium low enough that flexible US LNG supply is once again incentivized to be sent to Europe, instead of to Asia (Exhibit 2, right panel), contributing to higher European LNG imports (Exhibit 3 and Exhibit 4). n Importantly, this hasn’t been enough yet to steady European gas storage injections, with Aug storage injections thus far widening the miss relative to our expectations. Should the average pace of NW Europe gas storage injections of the last seven days hold for the remainder of the month, NW European gas storage will end Aug at 51% full, 3.4pp below our base case (vs 2.5pp below our base case as of end-Jul) (Exhibit 5). This is consistent with TTF recently moving above the 65 EUR/MWh threshold, taking JKM to the mid-$20s/mmBtu, the level at which we have historically observed incipient reduction in Asia industrial demand for gas. n Going forward, we reiterate our view that, if Persian Gulf LNG exports do not rise further, whether with visible or dark SoH crossings, TTF at 65 EUR/MWh will not be enough for Europe to manage storage through winter. Specifically, in a scenario where Middle East energy exports normalize only gradually through 2027, we estimate that Dec26 TTF would likely need to move above 100 EUR/MWh (assuming average winter temperatures), 110% above our 50 EUR/MWh base case, to more significantly discourage Asia LNG demand. This upside risk to winter TTF to over 100 EUR/MWh (JKM near $35/mmBtu) is consistent with previously observed LNG demand sensitivity to price. However, because LNG prices have only been this high once, during the 2022 European energy crisis, our conviction in the scale of demand response at such price levels is low, and we would see it more as a price-discovery process.

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Goldman Sachs Natural Gas Comment

Exhibit 1: Qatari loadings continue to miss relative to our expectations given the reduced flow through Hormuz Qatari LNG loadings, mtpa

Source: Kpler, Goldman Sachs Global Investment Research

Exhibit 2: Asia’s LNG price premium over Europe has declined, now incentivizing flexible US supply to head to Europe instead of Asia In the right panel, JKM-TTF spread above the red line means US supply is incentivized to go to Asia instead of to Europe

US shipping cost differential to deliver LNG in Asia vs in Europe calculated based on the S&P Global Commodity Insights daily published full shipping cost by route.

Source: S&P Global Commodity Insights, ICE, Goldman Sachs Global Investment Research

Exhibit 3: US LNG loadings for delivery in Europe have Exhibit 4: ...contributing to a pick up in NW European LNG picked up relative to loadings to Asia... imports vs Asia mtpa YoY LNG imports by region, mtpa

Source: Kpler, Goldman Sachs Global Investment Research Source: Kpler, Goldman Sachs Global Investment Research