The economic shockwaves from the renewed conflict in the Middle East are no longer confined to crude oil. In one of the most striking recalibrations of the year, Goldman Sachs has lifted its European natural gas price forecasts substantially, citing the prolonged disruption to liquefied natural gas (LNG) flows through the Strait of Hormuz. The conflict is reordering the global gas market in ways that could outlast the immediate hostilities and reshape energy trade well into the next decade.

The latest revision by Goldman Sachs of its short-term forecast for European natural gas prices illustrates the scale of this vulnerability. The US investment bank has raised its forecast for prices at the Dutch Title Transfer Facility (TTF), Europe's key gas trading hub, citing the continuing tensions in the Middle East and the possibility that liquefied natural gas (LNG) supplies from the Gulf will recover more slowly than previously expected.

Goldman Sachs now expects TTF gas prices to average €60 per megawatt-hour in the third quarter of the year, up from its previous forecast of €41/MWh. Its forecast for the fourth quarter has also been raised from €40 to €53/MWh. For 2027, the bank increased its projection from €30 to €31/MWh.

At first glance, the increase in the 2027 forecast appears relatively modest. However, the sharp upward revisions for the third and fourth quarters demonstrate how quickly geopolitical risks can affect energy prices. The market is not simply responding to current supply disruptions. It is also pricing in uncertainty over how long those disruptions may last, how quickly LNG infrastructure can return to normal operation and whether alternative suppliers can compensate for lost volumes.

It is worth adding that the Strait of Hormuz, through which........

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