Europe on Brink of Energy Crisis as Gas Reserves Plummet

Europe is bracing for a potential energy crisis as natural gas reserves remain below seasonal averages and diesel supplies are under pressure. Goldman Sachs' Samantha Dart, head of global commodities research, warned that low natural gas reserves and restricted LNG imports pose significant risks to European economies.

Natural gas reserves in Europe stand at approximately 57.87% of total capacity, roughly 18 percentage points below the average for the 2009-2025 period. Dart emphasized the need for accelerated LNG imports to achieve a target warehouse fullness by the end of October.

Goldman Sachs forecasts that if energy exports from the Persian Gulf are restored only gradually, TTF natural gas prices for December may need to exceed 100 euros per megawatt-hour to curb Asian LNG demand. Conversely, a faster restoration of oil and natural gas flow through the Strait of Hormuz could drive TTF prices toward 40 euros/MWh.

The combination of low natural gas reserves, potential restrictions on LNG imports, and pressures in the diesel market creates a difficult energy environment for Europe. If the turmoil around the Strait of Hormuz continues, Europe may enter winter with natural gas and diesel reserves significantly below normal seasonal levels, leading to a new surge in energy prices.