Europe's Gas Crisis Unfolds at Worst Possible Timing

Europe's energy crisis is looming large as natural gas prices have more than doubled over the past year, driven by disruptions in the Middle East and the closure of the Strait of Hormuz.

The European Union is facing a tough winter with low gas reserves, with storage facilities currently at 66% capacity, down from 83% last year. Germany and the Netherlands are particularly exposed, with their storage facilities only 54% and 48% full respectively.

While Europe may be able to secure enough gas to avoid an immediate physical shortage, the economic cost is likely to be significant, with imports already reaching €117 billion in 2025. With prices higher than ever before, this figure is set to rise further, posing a difficult policy problem for governments.