Europe is entering winter with historically low gas reserves and cannot withstand further supply shocks, Fatih Birol, head of the International Energy Agency (IEA), has warned, as the US-Israel war on Iran disrupts global supply chains. Speaking to Al Jazeera on the sidelines of an international conference in Berlin on Wednesday, Birol said all regions are being hit by energy disruptions in the Strait of Hormuz but Europe is particularly vulnerable, and will likely face rising costs of liquefied natural gas (LNG) in the coming months even if peace returns to the Gulf today.

Source: Al Jazeera (via Europe Says)

"Normally before the winter, European countries have a lot of gas stocks, but the gas stocks we have while we are entering this winter are much lower than historical averages," Birol said, adding that Europe's gas competes with that of Asian countries, which are even more dependent on the Middle East. "I think if we have a harsh winter, we may see higher prices of natural gas in Europe," he said. "The best day for a ceasefire would have been yesterday," the IEA chief added. Nearly a tenth of the continent's LNG transited through the Strait of Hormuz before the war, Al Jazeera reported.

Source: Al Jazeera (via Europe Says)

72%EU gas storage full entering winter — against a usual ~90% (Al Jazeera/analysts)
72.4%storage level on October 3 — the lowest for this time of year since records began in 2011 (IEEFA)
7%winter gas demand cut the EU may need — yaani 14 billion cubic metres — if supplies stay tight (IEEFA)
€3bnextra cost of imports to cover the gap — yaani about $3.4 billion more than a year ago (IEEFA)

A report by the Institute for Energy Economics and Financial Analysis (IEEFA) put EU storage at about 72.4% on October 3, compared with around 83% a year earlier, and warned the bloc may need to cut winter gas demand by 7%, or 14 billion cubic metres, compared with last winter — yaani 1,400 crore cubic metres. Europe entered winter with around 74 billion cubic metres in underground storage against about 85 billion a year earlier, and storage in Germany, the EU's largest gas user, is below 60%, according to data cited by IEEFA and Gas Infrastructure Europe. In a separate stress scenario, the European Network of Transmission System Operators for Gas (ENTSO-G) said stocks could fall as low as 11% in a colder-than-usual winter with limited LNG supply — a scenario, not a forecast.

Source: Industrial Info Resources (IEEFA report)

The squeeze tightens further from January 1, 2027, when the EU's full ban on imports of Russian LNG under long-term contracts takes effect. The European Commission says the bloc is better prepared for winter than it was in 2021-22, citing diversified supplies, expanded LNG import capacity and lower demand — but analysts say how much extra gas Europe must buy, and at what price, will depend on the weather and on how long the Hormuz disruption lasts.

Source: IEEFA analysis summary

What is solid

  • EU gas storage stood at about 72.4% on October 3, the lowest for this time of year since records began in 2011, against ~83% a year earlier (IEEFA, citing Gas Infrastructure Europe data).
  • IEA head Fatih Birol warned in Berlin that Europe's stocks entering winter are much lower than historical averages and that a harsh winter could bring higher gas prices (Al Jazeera).
  • IEEFA estimates the EU may need to cut winter gas demand by 7% (14 bcm) versus last winter, and that covering the storage gap with imports could cost about €3 billion more than a year ago — yaani about $3.4 billion (IEEFA).
  • The EU ban on Russian LNG imports under long-term contracts takes effect on January 1, 2027 (IEEFA/Industrial Info).

What is only claimed

  • ENTSO-G's figure of stocks falling to 11% is a stress scenario for a cold winter with limited LNG, not a prediction (OilPrice/ENTSO-G).
  • The European Commission says the EU is better prepared than in 2021-22 because of diversified supplies and expanded LNG capacity — whether that offsets the record-low storage depends on winter weather and the Hormuz disruption (IEEFA summary).