Europe is facing another year of high gas prices as storage reserves remain critically low. The continent's reserves, depleted to record lows, will need time to restock, leaving households and industries vulnerable to sustained high costs. European benchmark gas prices have surged over 150% this year due to shipping disruptions in the Strait of Hormuz, which trapped nearly 20% of global liquefied natural gas (LNG) exports from Qatar and the UAE, primarily bound for Asia.
Analysts predict European gas storage will only reach 75-78% capacity by November 1, significantly below the five-year average. Even with mild winter weather, reserves could drop to around 20% by April, intensifying pressure to restock in 2027. Yuriy Onyshkiv of LSEG warns that the tight supply situation may extend into the next summer. Meanwhile, Moutaz Altaghlibi of ABN Amro notes that while there is no outright supply shortage, the region lacks sufficient operational buffers, leaving it heavily dependent on pipeline supplies and LNG from Norway and the US.
Consumers are expected to bear the brunt of these price hikes, with retail contracts likely to renew at higher rates. In Germany, gas tariffs for new customers have already risen 55% this year, and similar increases are anticipated for existing contracts. In the UK, household energy bills could rise another 16% in January, according to Cornwall Insight. Analysts also warn that industries are struggling to stay competitive, as EU gas prices remain three times higher than in the US.
Some experts argue that the European Union should take more proactive measures to address the crisis. The EU has proposed lowering electricity taxes and coordinating gas storage refilling, but its energy chief recently urged member states to cut gas demand. The bloc has also launched initiatives to speed up renewables deployment and reduce dependency on fossil fuel imports, though some analysts believe the severity of the current crisis is not yet fully recognized. Meanwhile, the EU's upcoming ban on Russian LNG imports from January 2027 will further tighten supply, adding to the market's challenges.