Europe is heading towards winter with European gas stocks at unusually low levels, raising concerns over supplies and the potential for higher prices, according to market analysts.
Almost one-fifth of global liquefied natural gas (LNG) supply has effectively been removed from the market following disruptions to flows through the Strait of Hormuz after the war with Iran began in late February, followed by damage to Qatar’s energy infrastructure.
The limited response from European markets to the developments is now causing concern.
At Gastech, one of the energy sector’s largest international events, which concluded in Bangkok on September 17, analysts from Wood Mackenzie and Rystad Energy said European gas storage levels were between 65% and 69% of total capacity.
Rystad Energy estimates that European storage facilities are around 67% full, compared with a five-year average of about 84% at this point in the year.
Germany is particularly exposed, with storage levels at around 55%. Wood Mackenzie also said European stocks were at their lowest level for this time of year since 2009.
Europe and Asia compete for LNG
The broader market assessment is that Europe and Asia will increasingly compete for a shrinking number of available LNG cargoes as European storage remains low.
This leaves major European economies entering the 2026-27 winter with stocks among the weakest levels seen in roughly two decades for this stage of the cycle.
David Lewis, a European gas and LNG analyst at Wood Mackenzie, said the combination of supply disruptions through Hormuz and below-average storage levels left Europe with little room for error this winter.
He said storage facilities normally act as a buffer for the market, but the current low levels and supply-demand conditions could mean that the cost of a cold winter or another supply disruption would quickly be reflected in prices.
Industry faces potential disruption
European gas stocks are normally around 84% to 85% full at this point in the year. The revised target for the 2026-27 winter is around 80%.
The UK could also face significant exposure. Sir Jim Ratcliffe, founder of petrochemicals group Ineos, told the BBC that low European gas storage levels posed a risk to the UK in the coming months.
He warned that a period of severe cold could leave the country short of gas and force industrial facilities to suspend operations.
The UK has limited gas storage capacity and relies heavily on LNG and imports from Europe. The country’s energy policy has faced criticism following the Labour government’s 2024 decision to halt new licences for North Sea exploration on environmental grounds.
The North Sea is now a mature production area, while Norway continues to export gas to the UK.
LNG competition could push prices higher
The UK could also face increased competition for LNG cargoes if arbitrage opportunities between the Atlantic and Asian markets return, potentially directing flexible supplies towards Asia at a time when European importers need them.
A UK government spokesperson said London remained fully committed to ensuring security of supply as part of the country’s overall energy mix.
Meanwhile, German state-owned energy company SEFE said it was working intensively to increase gas storage levels. SEFE currently represents around one-quarter of Germany’s total storage capacity.
At Gastech, executives from Equinor and Shell estimated that European gas stocks could reach around 75% of capacity by the first week of November. However, they indicated that reaching the 80% target would be difficult.
Cold winter could drive prices higher
Unless Europe experiences a mild winter, prices could rise as European importers compete with Asian buyers for limited supplies in a market with little spare capacity.
According to comparative data from S&P Global Energy, spot prices in fast-growing Asian markets are around $30 per million British thermal units (mmBtu) this year, compared with approximately $10 per mmBtu before the war with Iran.
Several gas market analysts estimate that competition between Europe and Asia for available LNG cargoes could push prices to $40-$45 per mmBtu if temperatures fall sharply.
For European policymakers, that prospect is adding to concerns over the continent’s energy security heading into winter.
Gaurav Sharma/Forbes
Also read: Europe faces jet fuel shortage, turns to South Korea for supplies
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