LNG

European gas prices at the Dutch TTF may need to top €100/MWh to attract enough flexible US LNG cargoes to refill storages ahead of the winter, Goldman Sachs analysts said.

Stalled US-Iran negotiations are manifesting LNG price premiums this autumn, with the average price for an October cargo delivered to Northeast Asia forecast at $22.50 per MMBtu. The geopolitical premium is firmly engrained in global LNG markets, fuelling a bullish sentiment in Asia where the price of delivered LNG increased by$0.85/MMBtu week-on-week to nearly$22.10/MMBtu.

Atlantic freight rates for spot LNG cargoes have fallen to a seasonal low of $20,000 per day, down $31 over the last fortnight, opening the arbitrage window for US LNG heading to Europe rather than Asia. Several LNG charterers have fixed vessels below round-trip economics due to a lack of fresh enquiry for Atlantic cargoes from Pacific Basin buyers, while shipowners are seen to be reluctant to ballast vessels westward.

With risks to ship LNG cargoes through the Strait of Hormuz likely to persist into the upcoming winter, Argus’ TTF front-month price assessment was last seen not far off €64/MWh, its highest level since January 2023.

The arbitrage for flexible US LNG cargoes heading to Asia is open with spreads between the Japan Korea Marker (JKM) and the Dutch TTF widening, as the tepid recovery of Qatari and UAE LNG exports is unlikely to outpace rebounding Asian demand.

The Hormuz risk premium has washed out of gas prices since the US-Iran understanding, leaving TTF and JKM far below their March crisis peaks. The physical data does not yet justify it. Combined Qatari and Emirati exports across the strait reached barely a tenth of normal in June, and the downside remains live.

Most European LNG buyers are expected to import less than anticipated due to higher prices and tighter markets, with Poten & Partners estimating around 17 mtpa of demand destruction this year, particularly in Italy and Belgium.

Bullishness abounds for LNG prices and winter 2026/27 contracts at Europe’s benchmark TTF gas trading hub after US President Donald Trump threatened to impose a US toll on shipments through the Strait of Hormuz. For spot prices, the sell-off after the peace memorandum was short-lived.

As Asian netbacks for delivered LNG cargoes outbid European prices, buyers are struggling to attract sufficient volumes to offset a looming storage shortfall. An additional 40 cargoes per month would be needed over the next five months, according to ICIS calculations, though economists doubt this is achievable.

Tightening LNG balances in Europe, amid maintenance across Norway’s pipeline network and lower imports, have made Kpler analysts “slightly bullish” on benchmark TTF gas prices, while restocking in China and stronger Asian demand underpin global LNG markets.