Europe’s gas stores are running low
Europe’s gas stores are historically low for this time of year, as disrupted Middle East LNG flows raise the risk of sharply higher prices this winter.
TL;DR
- Europe's natural gas inventories are at historically low levels for this time of year, significantly below the five-year average.
- Disruptions in the Strait of Hormuz have curtailed LNG exports from key Middle Eastern producers during Europe's gas-storage refill season.
- A hot summer increased demand for energy, while reduced nuclear and weak wind power generation limited alternative energy sources.
- Competition with Asia for limited global LNG supplies could drive European gas prices above 100 euros per megawatt-hour.
- If Middle East LNG flows do not recover significantly, Europe could face very high gas prices, increased consumer bills, and potential limits on industrial gas consumption.
- A potential deal between Iran and Oman to secure transit through the Strait of Hormuz could improve LNG export prospects.