Europe Faces Lowest Gas Storage in 15 Years Amid Mideast Conflict, Russian LNG Ban

Europe is set to enter the heating season with its lowest gas storage levels in at least 15 years, threatening higher prices for businesses and households this winter. Consultancy Wood Mackenzie forecasts EU storage facilities will be only 76 percent full by the end of the restocking season (April-October), the lowest peak since at least 2011, according to Gas Infrastructure Europe (GIE).

This follows the US-Iran war, which disrupted LNG shipments through the Strait of Hormuz, reducing supplies from Qatar and the UAE. EU storage began the restocking season at 28 percent after a cold winter. Despite a recent interim peace deal between Washington and Tehran, which stabilized gas prices around €40/MWh, prices fell too low to attract US LNG cargoes. Natasha Fielding of Argus Media warns that constrained LNG supply will lead to lower winter stocks and potential price spikes.

Qatar's prime minister, sheikh Mohammed bin Abdulrahman al-Thani, stated production would return to normal within weeks, except for two units damaged by Iran. However, analysts like Samantha Dart of Goldman Sachs question the pace, estimating European storage could be 74 percent full by season's end if undamaged Qatari units reach full capacity by July, or 70 percent if delayed to August. A recent vessel strike in the Strait of Hormuz further complicates shipping.

The European Commission stated current storage levels (10 percent below pre-crisis average, with 17 percent reduced demand) do not raise immediate concerns, advising member states to fill facilities to 80 percent (or 75 percent) to ease price pressure, a nonbinding target lower than the previous 90 percent. However, Energy Aspects and Wood Mackenzie predict higher winter prices, especially with a cold snap, and the EU's planned ban on Russian LNG (14 percent of imports) from January 1st adds to the risk.