Iran War Slows Europe's Gas Refill, Raises Winter Cost Warnings

The Iran war is hindering Europe's ability to cheaply refill gas stores, leading to warnings of higher winter costs and compounding the continent’s economic challenges. Summer gas prices have risen to winter levels due to Middle East conflict supply constraints and the EU target to fill storage to 80 per cent.

Henning Gloystein of Eurasia noted that storage filling will be slower, risking higher spot market prices in winter. Gas storage, providing almost one-third of winter gas, is more depleted than in recent years. Traders are currently dissuaded from buying gas for storage; Netherlands' reserves are at 7.4 per cent, Germany's at 23.5 per cent, and the EU average is 30 per cent.

Uniper, a major trader, warned that refill targets would not be met without market changes. However, Tom Marzec-Manser of Wood Mackenzie expects prices to align to incentivize storage as summer progresses, predicting stocks will reach mid-80s per cent by end of October, in line with targets. The Commission set these targets after Russia's invasion of Ukraine and gas supply cuts in 2023.

European gas prices for July 2026 contracts are €39.51 per megawatt hour, up from €33 last year, but down from €61.45 last month. Cristian Signoretto of Eurogas noted a «patchwork» of reserves, with Italy and Austria having higher stocks than the Netherlands and Germany. Some countries, like France, have pre-booked capacity, while others may see national bodies intervene as a last resort. Gloystein believes authorities may need to intervene if the situation persists, but Europe is unlikely to face shortages next winter, though poorer countries may be priced out.