Goldman Sachs raises near-term TTF forecasts: slower export recovery at Hormuz lifts Europe’s winter natural gas risk premium

Overview

This Goldman Sachs natural gas research report focuses on the impact of the recovery pace of LNG exports through the Strait of Hormuz and the Persian Gulf on European natural gas prices. The report delays its assumption for the normalization of Persian Gulf LNG exports from Jul26 to Oct26, arguing that this will reduce global LNG supply by about 16 mtpa over the summer and leave Northwest Europe with lower inventory levels than previously expected ahead of winter. Based on a tighter European gas balance, Goldman Sachs raises its near-term TTF price forecasts and emphasizes that upside price risk remains pronounced in the event of a winter cold shock.

Core views

The core view is that short-term TTF prices need to remain close to 65 EUR/MWh to more clearly suppress Asian LNG demand and help Europe manage inventory risk. Goldman Sachs raises its Bal3Q26/4Q26/2027 TTF forecasts to 60/53/31 EUR/MWh. If Middle East energy exports recover more slowly, Dec26 TTF could exceed 100 EUR/MWh; if Hormuz flows recover faster than expected, TTF could fall back to around the 40 EUR/MWh coal-to-gas switching threshold. Over the long term, Goldman Sachs maintains its bearish 2028/2029 TTF forecasts of 19/16 EUR/MWh, as new US LNG projects could lead to larger and more persistent oversupply.

Analysis framework

The report uses a combined approach incorporating natural gas supply-demand balances, LNG export assumptions, European storage trajectories, Asian demand price elasticity, and fuel-switching thresholds. The analysis starts from delays in Persian Gulf LNG exports, estimates the transmission effects on global LNG supply, Asian demand, European storage, and TTF prices, and assesses winter price risk through upside and downside scenarios.

Methodology notes

• Commodity supply-demand balanceLNG supply and European natural gas storage balance

  Delayed export recovery reduces Europe’s inventory safety buffer

  The report assumes the normalization of Persian Gulf LNG exports is delayed to Oct26, thereby reducing global LNG supply over the summer and lowering the forecast for Northwest Europe’s Oct26 inventories to about 67% full and Mar27 inventories to about 28% full.

• Price elasticity and demand destructionAsian LNG demand suppression threshold

  TTF near 65 EUR/MWh more clearly suppresses Asian industrial gas demand

  Goldman Sachs believes that, with Europe’s balance tight and exposed to winter cold-shock risk, TTF may need to approach or exceed 65 EUR/MWh in order to reduce Asian LNG demand through the price mechanism.

• Scenario analysisMiddle East export recovery speed and winter weather scenarios

  Slow export recovery and a cold winter form the upside scenario, while fast recovery and a warm winter form the downside scenario

  If Middle East exports normalize only gradually by 2027, Dec26 TTF could exceed 100 EUR/MWh; if Hormuz flows recover faster, TTF could fall back toward 40 EUR/MWh.

• Long-term supply cycleLNG oversupply framework

  New US LNG export projects may worsen long-term oversupply

  The report argues that recent FIDs for US LNG export projects indicate long-term supply may be larger and more persistent than the base-case expectation, and together with a rebound in Asian coal-fired and renewable power generation, this could weigh on longer-dated gas demand and prices.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• TTF natural gas

  Core pricing asset

  Strengths

  Supported in the short term by tight European inventories, delayed recovery in Persian Gulf LNG exports, and winter risk premium.

  Weaknesses

  If Hormuz flows recover faster or winter is warmer, prices could fall back toward the coal-to-gas switching threshold.

  Comparison

  Goldman Sachs forecasts Bal3Q26/4Q26 at 60/53 EUR/MWh, close to forwards at 58/57 EUR/MWh; long-term 2028/2029 forecasts are 19/16 EUR/MWh, below forwards at 29/25 EUR/MWh.

  Risks

  The path of Middle East export recovery, winter weather, Asian demand elasticity, and European inventory levels could cause prices to deviate sharply from the base case.

• LNG

  Supply-demand transmission asset

  Strengths

  Delayed Persian Gulf exports reduce global supply, increasing Europe’s short-term pressure to compete for LNG cargoes.

  Weaknesses

  Over the long term, new US LNG export projects could expand oversupply.

  Comparison

  Short-term tight supply-demand conditions and long-term supply expansion create price impacts in opposite directions.

  Risks

  The speed of supply recovery, Asian demand, US project FIDs, and actual commissioning pace are key uncertainties.

• JKM

  Asian LNG price benchmark

  Strengths

  Asian demand and competition with European TTF jointly influence JKM.

  Weaknesses

  High LNG prices have already led Goldman Sachs to lower its Asian summer demand expectations.

  Comparison

  The report says near-term TTF and JKM forecasts were raised, but the main text focuses on disclosing TTF figures.

  Risks

  Destruction of Asian industrial demand and substitution by coal-fired and renewable power will affect demand support for JKM.

• Coal-fired power and renewable power

  Substitution factor for natural gas demand

  Strengths

  If Asian coal-fired and renewable power generation recover, they can reduce natural gas demand and depress long-term prices.

  Weaknesses

  They provide limited short-term relief for Europe’s winter natural gas storage risk.

  Comparison

  Relative to natural gas, coal-fired and renewable power are sources of medium- to long-term downside demand risk.

  Risks

  Policy, weather, generation availability, and fuel spreads will affect the strength of substitution.

Key data

• Assumption for normalization of Persian Gulf LNG exportsOct26, previous Jul26Rising Middle East uncertainty pushes the recovery assumption later.
• Impact on global LNG supply over the summerNet reduction of 16 mtpa, about 4%Refers to the estimated reduction in global LNG supply over the balance of summer.
• Revision to Asian LNG demandCut by 4 mtpa to 262 mtpaDue to higher LNG prices, Goldman Sachs lowered its expectation for average Asian demand over the remaining summer period.
• Northwest Europe Oct26 storage forecastAbout 67% full, previous 74%Corresponds to inventory levels before the start of winter.
• Northwest Europe Mar27 storage forecastAbout 28% fullBased on a 10-year average temperature assumption.
• Cold winter inventory shockA winter two standard deviations colder could reduce end-of-season inventories by 24 percentage pointsShows the vulnerability of the base inventory path to weather shocks.
• Short-term TTF forecastsBal3Q26/4Q26/2027 at 60/53/31 EUR/MWh, previous 41/40/30 EUR/MWhNear-term forecasts were raised; near-dated forwards are about 58/57 EUR/MWh.
• TTF price suppression threshold65 EUR/MWhGoldman Sachs believes this level would more clearly suppress Asian LNG demand.
• Dec26 upside scenario>100 EUR/MWh, about $35/mmBtuAbout 110% above the 50 EUR/MWh base case.
• Dec26 downside scenario40 EUR/MWhIf Hormuz flows recover faster, TTF could return to the coal-to-gas switching threshold, about 20% below the base case.
• Long-term TTF forecasts2028/2029 at 19/16 EUR/MWhBelow corresponding forwards of 29/25 EUR/MWh, with full reopening of Hormuz shipping as a key assumption.

Impact & implications

For natural gas consumers, the direct implication of the report is that the upside risk in winter European natural gas and LNG prices still needs to be hedged, especially if Middle East export recovery is slower or winter is colder. For the market, a higher short-term risk premium may support TTF and related LNG prices; however, longer-dated prices still face downward pressure from expanding US LNG supply and a recovery in Asian coal-fired and renewable power generation.

Risks

• Middle East energy exports recovering more slowly than expected could push Dec26 TTF above 100 EUR/MWh.
• A significantly colder winter would increase European gas demand and further reduce end-of-season inventories.
• If Hormuz flows recover faster than expected, TTF could fall back toward 40 EUR/MWh.
• A warm winter could weaken coal-to-gas switching demand and bring forward lower prices closer to 2027 average levels.
• Long-term US LNG supply additions exceeding expectations could worsen oversupply and weigh on 2028/2029 prices.
• A recovery in Asian coal-fired and renewable power generation could reduce natural gas demand and weaken support for LNG prices.

What to watch

• The pace of LNG export recovery in the Persian Gulf and the Strait of Hormuz.
• Northwest Europe natural gas storage levels in Oct26 and Mar27.
• Whether European winter temperatures are significantly below the 10-year average.
• Whether TTF approaches or breaks through the 65 EUR/MWh demand suppression threshold.
• Changes in Asian LNG import demand and industrial natural gas demand.
• FIDs and commissioning progress of new US LNG export projects.
• Changes in coal prices, carbon prices, renewable generation output, and coal-to-gas switching thresholds.