Natural Gas in Focus: Iran Conflict Could Have ‘Very Painful’ Consequences - Exchanges

Podcast Summary: Goldman Sachs Exchanges

Episode: Natural Gas in Focus: Iran Conflict Could Have ‘Very Painful’ Consequences
Date: April 7, 2026
Host: Alison Nathan
Guest: Samantha Dart, Co-Head of Global Commodities Research

Episode Overview

The episode explores the often-overlooked impacts of the Iran conflict on global natural gas markets, particularly the recent disruptions to liquefied natural gas (LNG) supply. Host Alison Nathan and guest Samantha Dart delve into the unique vulnerabilities of natural gas markets, supply-demand dynamics, and potential economic repercussions as global LNG supply faces major strains—especially from Qatar’s damaged infrastructure. Dart explains why, in some ways, a natural gas shock can be even more damaging or “painful” than an oil shock, and what the world may face heading into the next winter.

Key Discussion Points & Insights

1. Fundamental Differences in Natural Gas Markets

[01:13] Samantha Dart explains the “seasonality of demand” and the essential uses of natural gas:
- Three main uses: Electricity generation, industrial applications (both as heat/energy and as a feedstock), and (most critically) winter heating in the Northern hemisphere.
- Inventory cycle: Stock is built from April to October to prepare for winter drawdowns (November–March).
- Urgency of the shock: Disruptions outside winter must be fixed before the next high-demand season.
- Unique market feature: There is rarely spare capacity, so prices must rise to destroy demand when supply is disrupted.
“It's almost like a deadline. Ok, you have seven months to fix this... If you don't have supply and you don't have spare capacity in the system... then prices have to go up and, and up and up to destroy demand and make this work.”
— Samantha Dart [02:28]

2. Current State: Qatar and the LNG Supply Shock

[03:47] After bombings in Qatar, 20% of global LNG capacity is offline, with some long-term damages.
- Even if the Strait of Hormuz reopens, it could be “many years” before full Qatari output returns.
- Long-term damage to two major liquefaction trains means total rebuilds are necessary (3–5 years).
“Qatar produces the equivalent of just about 20% of global LNG supplies. And all of that is disrupted at the moment. It’s all shut down.”
— Samantha Dart [03:49]

3. Market Reaction & Price Surprises

[04:30] Despite the major supply shock, price spikes have been smaller than expected:
- LNG prices are up “between 50 and 70%,” just enough to make gas more expensive than coal.
- Not yet expensive enough to incentivize switching from oil products or cause major industrial shutdowns in Asia.
- Currently, substitution is mainly moving from gas to coal in power generation.
"For a shock of this magnitude, I would have expected more. I would have expected that natural gas would maybe become more expensive than some oil products... We're seeing some demand destruction, but prices are just above coal and nothing else."
— Samantha Dart [05:06]

4. Infrastructure Repair: What Recovery Entails

[06:41] Qatari authorities say full capacity could take 3–5 years to restore (due to rebuilds).
[07:19] Restarting undamaged sites could take “two to three weeks,” but logistical hurdles (scattered tankers, possible hidden infrastructure damage) may mean delays.

5. Broader Supply Dynamics & Duration Risk

[08:22] If the Qatari supply loss is brief, average 2026 disruption is only 5–6% of global LNG—manageable.
If the conflict drags, however, it impedes rebuilding storage for next winter, risking severe price hikes.
Europe’s situation is somewhat cushioned by Asian nations (notably China) selling some of their stored gas post-mild winter to global markets.
- But the “saving” from China is finite; ongoing supply losses will overwhelm these stopgaps.
"The amount of supply you’re losing from Qatar every single day is still more than four times what China is saving the world right now.”
— Samantha Dart [09:27]

6. Can Other Exporters Fill the Gap?

[10:14] The US is now the largest LNG exporter (30% of global supply).
- However, there is “no spare capacity.”
- Existing infrastructure cannot ramp up quickly to fill the Qatari shortfall.
"What you see is what you get... The US, the largest producer of LNG in the world, is just sitting there and can't help the rest of the world rebalance the market."
— Samantha Dart [10:32]

7. Risks for Europe: Déjà Vu?

[11:24] Europe's exposure is real, recalling the 2022 scramble post-Russia's invasion of Ukraine.
Whether Europe faces another crisis depends on the duration of the supply shock:
- A swift resolution: Minor impact, prices come down.
- Protracted disruption: More acute demand destruction required, much higher prices.
“There is a risk that this just drags so much that it makes the process very painful, meaning very high prices to destroy a lot of demand.”
— Samantha Dart [11:55]

8. Price Outlook: Two Scenarios

[12:22] Binary outcomes identified:
- Best case: Fast resolution drops prices ~20% below current elevated levels.
- Worst case: Prolonged crisis could lead to a further 50–100% surge from current levels as demand needs to be destroyed.
“Things can look really affordable pretty soon, or we might have to just test new highs. And, and like I said, up to 100% higher than we are today just to make sure we have enough natural gas for next winter.”
— Samantha Dart [13:18]

9. Market Psychology: “Frog in Hot Water”

[13:43] Uncertainty about the conflict is keeping prices from spiking now, but this may create bigger problems later.
The market may be underestimating the need to act now to ensure winter storage is sufficient.

"It's almost like that story of the frog in hot water... the headlines are back and forth, is this thing gonna end?... Prices are not giving us enough incentive to destroy demand and guarantee the storage situation today. Is it going to be too close to winter to get it done when the time comes? And I think that's the real risk.”
— Samantha Dart [13:49]

Notable Quotes & Memorable Moments

On urgency and deadlines:
“You have seven months to fix this... If you don't have supply and you don't have spare capacity in the system... prices have to go up and, and up and up.” [02:28]
On structural damage:
"These two liquefaction trains were so damaged that we need to start over, we need to rebuild them from scratch.” [06:43]
On market's muted price response:
“For a shock of this magnitude, I would have expected more.” [05:06]
On Europe’s risk:
“There is a risk that this just drags so much that it makes the process very painful, meaning very high prices to destroy a lot of demand.” [11:55]
On scenario outcomes:
“Up to 100% higher than we are today just to make sure we have enough natural gas for next winter.” [13:21]

Timestamps for Important Segments

[01:13] – Natural gas market fundamentals and unique vulnerabilities
[03:47] – Scale and nature of Qatari LNG disruptions
[04:30 / 05:34] – Price response and substitution to coal
[06:41] – Infrastructure damage and restoration timelines
[08:22 / 10:14] – Impact on global supply, US capacity limits
[11:24] – Risks for Europe and dependence on disruption duration
[12:22] – Best case vs. worst case scenarios
[13:43] – Market psychology: Risks of delayed demand destruction

Conclusion

The episode underscores how the Iran conflict’s effects on natural gas—and LNG in particular—are both profound and possibly underappreciated compared to oil shocks. With major Qatari capacity offline, a lot depends on whether a resolution emerges soon or if the crisis drags on, risking dangerous inventory deficits and price spikes by winter. Despite some temporary stopgaps (like China's sales to global markets), the risk to Europe and Asia remains high if the disruption persists. As Samantha Dart notes, the pain could be “very high prices to destroy a lot of demand,” making the next six months crucial for global markets.