Europe is again facing high natural gas prices due to instability in global markets related to disruptions in the Strait of Hormuz, after spending a significant part of the last two years restoring its gas security following the loss of Russian pipeline supplies.
The European Union is now rushing to fill its gas storage before winter. However, due to liquefied natural gas (LNG) exports from the Persian Gulf being increasingly redirected to Asia, the EU’s target of filling storage to 90% is now effectively unattainable, according to energy analytics company Montel.
Natural gas supplies are expected to shrink due to the war with Iran and the effective closure of the Strait of Hormuz, through which about 20% of global gas transit passes. The European Commission has allowed EU countries to fill storage to levels below 90% to prevent panic buying and a sharp rise in prices.
Despite these relaxations, which allow the target level to be reduced to 75%, by the end of July, European gas storage was only 75% full. This is approximately 12 percentage points less than last year and 16 percentage points below the average for the past five years, according to Montel.
Montel‘s modeling predicts that by November 1, the level of European storage will range from 69% to 84%, depending on injection rates and LNG availability. This means that the EU’s target of 90% will remain out of reach.
“Ongoing disruptions to LNG flows through the Strait of Hormuz mean that pressure on the European gas market continues to grow as winter approaches”, said Joachim Endress, a gas market expert at Montel. The situation is particularly acute in Germany, where storage was only 46% full by the end of July.
From April to July, net injection volumes were 11% lower than the five-year average and 18% lower than the same period last year. This lag creates a serious challenge for Europe over the final three months of the injection season.
Competition for LNG and higher prices
According to Montel, from May to July, Europe received an average of only 105 LNG cargoes per month—significantly fewer than the approximately 130 cargoes per month needed to bring storage levels close to 80% by early November. As a result, a deficit of about 72 cargoes has emerged.
To reach at least 80% storage capacity by November, Europe now needs to attract more than 140 LNG vessels per month in August, September, and October. According to Montel, this is unlikely unless European gas prices rise significantly or LNG flows through the Strait of Hormuz resume.
The gas storage deficit could increase pressure on natural gas prices in Europe as winter approaches. With less gas in storage, traders will have a smaller safety margin in case of a sudden increase in demand due to cold weather or supply disruptions. Meanwhile, the EU is competing with Asia for LNG cargoes and may have to pay more to secure supplies that could otherwise go to Asian buyers willing to pay higher prices.
Asia pays more
LNG cargoes from the United States, which previously went to Europe, are increasingly being redirected to Asia, where buyers offer higher returns. LNG supplies from the United States to China, Japan, South Korea, Taiwan, and India tripled from March to July, reaching record levels. In July, supplies to these five markets exceeded those from the United States to Europe for the first time.
For most of the period since April, selling LNG from the United States to Northeast Asia has been more profitable than supplying it to Northwest Europe. Therefore, Europe may have to pay more to attract these cargoes, ultimately leading to higher energy costs.
This could make the EU gas market increasingly vulnerable as winter approaches. Cold weather, another disruption in global LNG supplies, or rising demand in Asia could quickly intensify competition for cargoes.
Despite acknowledging the “unstable situation” in global gas markets, a spokesperson for the European Commission dismissed concerns about a possible winter shortage, stating that the current situation is “not at all extraordinary.” “We are very close to the 62% storage filling level. There are no immediate grounds for concern about gas supply security in the EU ahead of the next winter season,” the Commission spokesperson told journalists on Thursday.
Following Russia’s full-scale invasion of Ukraine in 2022, the EU has been restructuring its natural gas supply system to end dependence on Russian energy sources and prevent Moscow from using revenues to finance the war. Meanwhile, the United States and Norway have become the leading suppliers of natural gas to the bloc, providing approximately 57% of its imports in 2025.
Source: Euronews
