Stock market today: S&P 500 slips as Trump’s tariff salvo sours sentiment
Investing.com - Natural gas prices have surged this week as the conflict between Israel and Iran escalated, but Goldman Sachs sees the impact on global markets having been negligible to date.
At 05:55 ET (10:55 GMT), natural gas prices rose 0.8% to $3.781 per million British thermal units, or MMBtu, up over 7% over the course of the last week.
“While the recent attacks on Iranian gas production capacity has disrupted Iranian domestic gas supply, the impact on global markets is negligible,” said analysts at Goldman Sachs in a note.
“Iran is largely excluded from globally traded gas routes, with its exports to Turkey (an LNG importer) having declined over the years, including a gas swap deal with Turkmenistan owing to Iran’s gas shortages. As a result, we expect the impact of Iranian outages on global LNG markets to be negligible.”
That said, tail risks remain, Goldman added.
“A tail risk escalation scenario including the disruption of energy flows through the Strait of Hormuz would be much more meaningful to the market,” the U.S. bank said.
This would leave Qatar’s 80 million tons per annum LNG exports (19% of global supply) at risk of disruption.
The 2022 energy crisis period suggests that sizable LNG demand responses to price start near $25/mmBtu (74 EUR/MWh), nearly double current LNG price levels, though a sustained disruption might take prices to much higher levels, above $30/mmBtu (88 EUR/MWh).
“We continue to see an Iran-led blocking of the Strait as highly unlikely given that (1) it would block Iran’s own oil sale revenues, (2) it would likely face strong opposition from China, the primary buyer of Iranian oil, and (3) it would increase the likelihood of bringing the U.S. and other Western nations into the conflict given the impact on global energy supply,” Goldman said.