Europe Braces for Gas Shortage as LNG Supplies Disrupted

Europe's gas storage levels are below normal ahead of winter, raising concerns about supply and prices. Liquefied natural gas (LNG) supplies from Qatar have been disrupted due to the closure of the Strait of Hormuz.

As a result, European natural gas prices climbed to their highest level in over three-and-a-half years on September 8. The price increase is attributed to the tightness of global LNG markets and low storage levels.

According to Gas Infrastructure Europe, EU storage facilities were about 68% full as of September 14, with roughly 772 terawatt-hours of gas in storage. This level remains below the 90% target normally sought ahead of winter.

The current situation is concerning, especially since it differs from the last major European energy crisis in 2021-22 when Europe had more supply and demand flexibility. If storage is not sufficient, there is a higher risk that storage will be depleted if there are supply disruptions or a very cold winter.