European gas markets face a tightening outlook in the second quarter as a combination of interrupted exports and redirected liquefied natural gas (LNG) cargos erode physical balances across the region, Goldman Sachs said in its latest outlook.
The bank calculates that roughly 80 million tonnes per annum (mtpa) of LNG supply - about 19% of global capacity - is currently offline. This loss of supply follows both the stoppage of flows through the Strait of Hormuz and the shutdown of a Qatari LNG production facility.
Strategists led by Samantha Dart noted that, in relation to the Iran conflict, "LNG flows through the Strait of Hormuz… have been at zero since the early days of the Iran conflict." That absence of flows, the bank said, has materially altered the distribution of LNG cargoes and tightened available supply.
Even though northwest European storage has so far held up, helped by mild weather and continued LNG arrivals, the bank sees a change in fundamentals in the coming weeks. Goldman expects more seasonal temperatures and increased diversions of cargoes toward Asia to reduce available gas in Europe.
Price-driven fuel-switching has already had an effect on demand. Higher gas prices have encouraged switching from gas to coal, which Goldman estimates has cut regional gas consumption by more than 20 million cubic meters per day (mcm/d). The strategists highlighted that this demand response and the evolving supply picture "can drive a further rally in prompt TTF prices." At present, prompt TTF trades near 51 EUR/MWh; Goldman places the oil-switching range at 57-84 EUR/MWh.
Goldman reiterated its second-quarter TTF forecast of 63 EUR/MWh. The bank added that current price levels may be enough to restore market balance if Qatari output returns to normal by early May. However, it cautioned that prices could need to rise further to force additional demand destruction should the outages continue beyond that point.
Options to replace the missing volumes are limited, the bank said. There are, the strategists asserted, "no re-routes for LNG that previously crossed the Strait of Hormuz." They also judged that increases in Norwegian pipeline output or operational shifts elsewhere are unlikely to fully compensate for the lost supply.
Price signals are already influencing where cargoes go. Asian LNG benchmark levels have moved above European prices, prompting initial diversions. Goldman estimates at least 10 mtpa of LNG that might otherwise have reached Europe is being rerouted to Asian buyers.
European gas inventories are also low heading into the injection season. Storage sits at 18% of capacity - the weakest level for this time of year since 2018 - and Goldman expects limited builds in April. The bank's estimate for April injections is about 0.6 billion cubic meters (bcm), roughly 84% below the April 2025 injections figure.
Absent a swift resolution to the conflict, the strategists warned that "imminent physical tightening" in Europe is likely to act as a catalyst for additional TTF price gains.
Summary
Goldman Sachs warns of a looming tightening in European gas markets driven by the loss of roughly 80 mtpa of LNG supply and the diversion of cargos to Asia. These developments, alongside low inventories and seasonal demand shifts, support a higher TTF price trajectory in Q2, with a maintained forecast of 63 EUR/MWh but scope for further upside if disruptions persist.
Key points
- Around 80 mtpa of LNG supply - about 19% of global supply - is offline following Strait of Hormuz stoppages and a Qatar plant shutdown.
- Goldman expects prompt TTF prices to move from roughly 51 EUR/MWh into the 57-84 EUR/MWh oil-switching range, and reiterates a Q2 forecast of 63 EUR/MWh.
- European inventories are at 18% of capacity, the lowest for this season since 2018, and April injections are estimated at about 0.6 bcm, roughly 84% below April 2025 levels.
Risks and uncertainties
- Persistence of LNG supply outages: If Qatari production does not normalize by early May, further price increases may be required to curb demand; this affects gas-dependent power generation and industrial consumers.
- Cargo rerouting dynamics: Continued diversion of at least 10 mtpa of LNG to Asia could sustain European supply deficits, pressuring utilities and wholesale energy markets.
- Limited offset options: The absence of re-routes through the Strait of Hormuz and constrained potential for compensatory output from other sources mean supply-side relief may be minimal, impacting energy traders and gas suppliers.