Low Gas Reserves Raise Risk of New Energy Shock in Europe
What Happened
Europe is struggling to replenish its natural gas storage ahead of winter, with inventories at about 63% capacity, one of the lowest levels for this time of year. Disruptions to LNG exports from the Middle East, linked to shipping constraints around the Strait of Hormuz, coupled with high summer energy demand, have tightened supplies. European benchmark Dutch TTF gas prices have already risen above €68/MWh, their highest level since early 2023.
Key Takeaways
Analysts warn that a cold winter and continued LNG supply constraints could push European gas prices to €90-120/MWh, with some forecasts suggesting prices may need to exceed €100/MWh to attract enough LNG cargoes away from Asia. A prolonged supply squeeze could revive energy-cost pressures last seen during Europe’s 2022 energy crisis.