Europe Heads into Winter with Low Gas Stocks, LNG Prices May Soar
Global liquefied natural gas (LNG) prices may surge this winter due to low European gas stocks and supply disruptions caused by the Strait of Hormuz closure. According to Shell's President of Integrated Gas, Cederic Cremers, Europe is heading into winter with historically low storage levels.
The EU's natural gas stocks are currently 67% full, a record low for this time of year, compared to an EU target of 80% capacity by December. Equinor estimates that gas stocks could reach 75% full by November 1.
The Strait of Hormuz closure has led to a loss of 36 million metric tons of supply this year, exacerbating the situation. Cheniere Energy's Chief Commercial Officer, Anatol Feygin, warned that Europe is in a difficult position heading into winter, with low inventory levels and limited spare supply available.
Industry experts predict that if it's a colder winter than normal, prices may reach $40/mmBtu, equivalent to about $240 per barrel for Brent. This could result in some demand destruction, as high prices may discourage consumption.