Goldman Sachs warns: Middle East turmoil disrupts inventory replenishment, European natural gas may soar to 100 euros in December

APP from Zhihong Finance has learned that Goldman Sachs stated that European natural gas prices may need to climb above 100 euros (117 USD) per megawatt hour in December for the continent to rebuild sufficient inventories to get through the coming winter.

Analysts Samantha Dart and Laura Syll wrote in a report that even though Europe's natural gas benchmark—the Dutch front-month futures price—has recently rebounded, if disruptions in Middle Eastern supply persist into next year, it still won't be enough to attract sufficient liquefied natural gas (LNG) from Asia. Last week, this futures price rose to a five-month high, exceeding 65 euros per megawatt hour.

As the US-Iran war has sharply reduced shipping through the Strait of Hormuz, European buyers face procurement difficulties in fierce competition with Asia for limited LNG cargoes. Natural gas is widely used in Europe for power generation, and inventory replenishment typically occurs during the summer months, but this year's progress is lagging behind usual levels.

Analysts stated in a report dated Sunday that, based on current consumption and replenishment rates, northwestern Europe's natural gas storage facilities will reach 51% of capacity by the end of this month, which is 3.4 percentage points below Goldman Sachs’ baseline expectation.

At a time when Europe faces the pressure to replenish natural gas inventories before winter demand surges, conflicts in the Middle East have severely restricted the flow of global energy. With no resolution in sight, US President Trump has announced plans for what he calls an "economic Normandy landing" strike against Iran.

The analysts wrote that at current price levels, "it is insufficient to support Europe in managing natural gas inventories and getting through the entire winter." They added: "Assuming Middle Eastern energy exports do not gradually return to normal until 2027, we expect December 2026 TTF natural gas prices may need to rise above 100 euros per megawatt hour." They pointed out that this is 110% higher than Goldman Sachs' baseline forecast of 50 euros per megawatt hour.

However, a glimmer of hope for Europe may come from the weather forecast. While Goldman Sachs’ latest outlook assumes average winter temperatures, a report released this month by Rystad Energy indicated that if a “super” El Niño phenomenon results in temperatures at least 2 degrees Celsius (3.6 degrees Fahrenheit) higher than the historical average, natural gas demand could decrease, offsetting the impact of low inventories.