EU Gas Storage Levels Remain Exceptionally Low as Winter Looms

The European Union is facing a gas storage crisis as it heads into winter. According to Energy Commissioner Dan Jørgensen, gas storage levels remain exceptionally low after a hot and dry summer forced countries to burn more gas for electricity, reducing the amount available to refill underground reserves.

Jørgensen warned that the bloc's energy price crisis could become a supply problem, citing the global market's deep impact from the US and Israeli war against Iran. The conflict has cut liquefied natural gas (LNG) flows through the Strait of Hormuz to 15-25% of pre-war levels.

Despite German gas storage levels trailing behind the EU average, the Federal Ministry for Economic Affairs and Energy anticipates no winter shortages. However, analysts argue that if the EU experiences a severely cold winter combined with continued closure of the Strait of Hormuz, global LNG prices could nearly double current prices, forcing Europe to aggressively outbid Asian markets for US gas.

Energy analyst Emil Constantinescu noted that 'the physical buffer is improving, but the market is still attaching a substantial premium to future gas availability and external supply risk'. The real verdict will come on 8 October, when ENTSO-G unveils its gas supply outlook for the winter.