Europe Faces 14-Year Storage Low as Gas Prices Surge

(MENAFN) Europe is heading into winter with unusually thin gas reserves as disruptions to global liquefied natural gas (LNG) supplies drive prices sharply higher, raising fresh questions about the continent's energy security in the months ahead.

Natural gas prices in Europe surged to their highest level in more than three and a half years on Sept. 8, as escalating tension between the US and Iran continued to choke off LNG flows from the Gulf amid the closure of the Strait of Hormuz. The resulting drop in LNG inflows has slowed the pace at which storage facilities can be refilled ahead of the cold season.

Compounding the squeeze, Qatar — one of the world's top LNG exporters — has largely halted shipments and extended force majeure declarations on cargoes bound for European and Asian markets through the autumn.

Figures from Gas Infrastructure Europe show EU storage facilities stood at roughly 68% capacity as of Sept. 14, holding around 772 terawatt-hours of gas — well short of the 90% target the bloc typically aims for heading into winter. That shortfall is fueling uncertainty over how quickly reserves can be rebuilt and how markets would respond if supply constraints persist or temperatures drop sharply.

What rising prices and thin storage signal

Bill Farren-Price, a distinguished research fellow at the Oxford Institute for Energy Studies, said current prices mark the "highest price since the start of the Iran crisis," though he noted levels remain well below the peaks recorded in 2022 following Russia's invasion of Ukraine. Speaking to Anadolu, he attributed the current strain to tightening global LNG markets driven by the Strait of Hormuz closure and the loss of Qatari supply.

A July analysis from Wood Mackenzie similarly tied rising prices to historically low European inventories, renewed disruption near the Strait of Hormuz, and stronger LNG demand from Asia. Massimo Di Odoardo, the firm's vice president of Gas and LNG Research, said the combination of factors will "almost guarantee elevated prices through this winter and into 2027."

Erisa Pasko, lead European gas analyst at Energy Aspects, argued the real concern isn't simply how much gas Europe has stored, but whether that gas can be withdrawn fast enough during periods of peak demand. She explained that European withdrawal capacity starts declining meaningfully once inventories drop below roughly 40% (about 44 bcm), with sharper deterioration below the 20% mark.

Pasko also drew a contrast with the last major European energy crunch, noting that the closest comparable period is 2021-22, when Europe entered winter holding around 75% of storage capacity. The critical difference this time, she said, is that Europe had far more supply and demand flexibility back then — including greater flexibility from Russian pipeline gas, coal-to-gas switching capacity, and domestic production. As she put it, "Much of that flexibility has disappeared."

Farren-Price warned that storage refilling is lagging behind the pace of recent years, and that insufficient reserves raise the risk of depletion should Europe face an especially cold winter or further supply shocks elsewhere in the global system. He added that shortfalls this year would also mean more gas storage capacity would need to be rebuilt in 2027.

Price and storage projections

Pasko said Energy Aspects currently expects European storage to reach around 75 bcm, or 69% of capacity, by the end of October — a level that would leave inventories at roughly a 14-year low heading into winter. She said 88 to 90 bcm by early November would offer a comfortable buffer against a colder-than-normal winter, but cautioned that hitting that threshold currently looks unrealistic even with government intervention. Under normal weather assumptions, she said, the current trajectory would leave Europe with only around 18.5 bcm, or 16% of capacity, by the end of March — leaving little cushion against a late-season cold snap.

Wood Mackenzie's analysis points to a similarly constrained outlook. Even if Qatar returns to full operational capacity by the end of September, the firm estimates European storage would reach only 75% by Nov. 1, compared with a five-year average of 90%. Should the Strait of Hormuz remain closed for another two months, it added, storage levels could fall below 70%.

Goldman Sachs, cited by Bloomberg, has likewise forecast higher prices if the Middle East disruption drags on, projecting in an August note that prices may need to "rise above €100 ($117) a megawatt-hour in December" for Europe to rebuild adequate winter reserves.

Still, Pasko said Energy Aspects does not expect an outright shortage. The firm's base-case outlook anticipates the market ultimately balancing itself, though she stressed that prices will need to stay elevated to preserve existing inventories and continue attracting LNG cargoes to the continent.

Wood Mackenzie added that it does not foresee any meaningful growth in new LNG supply over the next nine to 12 months, with additional Qatari capacity not expected to come back online until the second half of 2027.

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