Goldman Sachs: Qatar LNG supply disruption exceeds expectations, exports may "drop to zero" until late March, fully recover in May

The impact of the geopolitical conflict in the Middle East on the global liquefied natural gas (LNG) market is exceeding previous expectations. Goldman Sachs has warned that Qatar, a core global supplier, will face significantly extended downtime for its LNG exports, and this massive supply vacuum will quickly tighten the balance of the global gas market, forcing a structural upward adjustment in short-term gas price levels.

According to statements from Qatar's Energy Minister last week, the resumption of operations is contingent upon the complete cessation of hostilities in the region, followed by several weeks to months before full production capacity can be achieved. According to the Wind Trading Desk, Goldman Sachs has significantly adjusted its export forecast timeline, currently expecting Qatar's LNG exports to remain at "zero" levels until late March, followed by a slow ramp-up in capacity for most of April, with full recovery to 79 mtpa (million tons per year) not expected until May.

The ongoing supply disruptions are directly driving up the market's pricing logic. Goldman Sachs has raised its natural gas price forecast for the second quarter of 2026, significantly increasing the expected European benchmark TTF price from €45 per megawatt-hour to €63 per megawatt-hour (approximately $22 per million British thermal units), and raising the expected Asian benchmark JKM price from $16 per million British thermal units to $23 per million British thermal units. This adjustment not only exceeds the current forward curve pricing but also indicates that the two major consumer markets are facing fierce competition for alternative gas sources.

With 20% of global LNG supply suddenly halted, the ripple effects are beginning to manifest in the industry. To balance the market, European gas prices are being forced up to levels sufficient to trigger fuel substitution, while some price-sensitive emerging market countries in Asia are already showing early signs of industrial gas demand destruction.

Extended Downtime Timeline, Europe Faces Inventory Tightening Pressure

Goldman Sachs analysts Samantha Dart, Laura Cyr, and Frederik Witzemann noted in a report released on the 8th that, due to the longer supply interruption, the annualized delivery volumes of Qatari LNG for March and April are expected to plummet to 18 mtpa and 43 mtpa, respectively, far below the pre-conflict expectations of 74 mtpa and 76 mtpa.

This supply shock will directly lead to a sharp reduction in import volumes for the European market. Goldman Sachs expects that LNG imports in Northwestern Europe will drop to 207 mcm/d (million cubic meters per day) and 195 mcm/d in March and April, respectively, a significant downward adjustment from previous expectations. The report emphasizes that although the recent mild weather in Northwestern Europe has somewhat offset the impact of declining LNG imports, without any other compensatory mechanisms, every two-week complete interruption of Qatari LNG supply will tighten Northwestern Europe's gas inventory by nearly 4% of total storage capacity.

Gas Prices Enter "Gas-to-Oil" Range, Asian Premium Attracts Cross-Region Arbitrage

To fill the massive supply gap, European gas prices (TTF) must remain at higher levels for a longer period to trigger fuel substitution mechanisms. Goldman Sachs points out that the current bottom of the "Gas-to-Oil" conversion range is €55 per megawatt-hour (fuel oil), with the top at €80 per megawatt-hour (distillate oil) Goldman Sachs has raised its TTF price forecasts for April and May to €75 per megawatt hour and €70 per megawatt hour, which means gas prices have fully entered the oil substitution range, incentivizing the market to shift towards hard coal and oil products, thereby offsetting losses from European LNG imports.

At the same time, the Asian market must attract additional LNG cargoes from the Atlantic basin to fill the gap left by Qatari supplies. To this end, Goldman Sachs has raised its JKM price forecasts for April and May to $29 and $25 per million British thermal units. By maintaining a positive premium of JKM over TTF, Asia can effectively guide the flow of cross-regional arbitrage cargoes. Additionally, market reports cited by Goldman Sachs indicate that rumors and evidence of industrial demand destruction are already emerging in India, Pakistan, and Bangladesh.

Tail risks exhibit a bidirectional characteristic, with the U.S. market relatively insulated

Surrounding the current baseline forecast, Goldman Sachs believes the market faces bidirectional risks. If disruptions to energy flows persist beyond April (such as an extended closure of the Strait of Hormuz), TTF and JKM prices may need to approach extreme highs of €100 per megawatt hour to trigger broader industrial demand destruction, thereby preserving sufficient gas inventories for the next winter. Conversely, if the conflict de-escalates quickly, TTF prices could rapidly retreat to around €40 per megawatt hour, within the coal conversion range.

It is noteworthy that despite the resurgence of turmoil in the global gas market, the U.S. market has not been substantially affected. Goldman Sachs reiterates that while U.S. Henry Hub gas prices may occasionally be influenced by the emotional swings of European TTF during intraday trading, fundamentally, U.S. gas prices will remain insulated from the surge in European and global LNG prices. This is because the U.S. is a net exporter of LNG, and its export terminals currently have no idle capacity to increase additional exports.

Long-term expansion plans hindered, but bearish logic for the long term remains unchanged

The conflict has not only impacted the current spot market but has also obstructed Qatar's long-term capacity expansion. Due to the current construction suspension, Goldman Sachs has delayed the expected commissioning date of the first production line of Qatar's North Field East expansion project (NFE) from October 2026 to January 2027, with subsequent seven production lines also expected to face similar delays.

This adjustment results in a reduction of 2.8 mtpa in the average annual new global LNG supply between 2027 and 2030. As a result of this slight adjustment, Goldman Sachs has made a minor upward revision to its gas price forecast for 2027, raising the TTF estimate to €23 per megawatt hour and the JKM estimate to $8.30 per million British thermal units. However, the firm emphasizes that the current tightening shock has limited transmission to the long-term balance, which does not hinder its extremely bearish outlook on global gas prices for 2028 and 2029, with related long-term forecasts remaining unchanged