Middle East tensions to have negligible impact on gas market — Goldman Sachs

The escalating relations between Israel and Iran drove natural gas prices up this week. However, Goldman Sachs analysts believe tensions in the Middle East will have a negligible impact on the world’s energy market. 

The bank says Iran is hardly part of globally traded gas routs. Its exports to Turkey, including a swap deal with Turkmenistan, have declined over the years. As a result, disruptions of Iranian natural gas flows will not affect global energy markets to any significant extent, Goldman Sachs says.

Nevertheless, the potential closure of the Strait of Hormuz threatens Qatar's 80 million tons per year of liquefied natural gas exports, or 19% of global supply. Prolonged disruptions may push gas prices above $30 per million British thermal units, the bank notes. 

That said, Goldman Sachs considers blocking of the Strait to be highly unlikely as it would deprive Iran of revenues from oil sales. In addition, such a step may face opposition from China, the main buyer of Iranian crude.