Europe's Gas Storage Levels at Record Low as LNG Prices Set to Surge
Global LNG prices are expected to surge this winter due to low gas storage levels in Europe and disruptions to shipments through the Strait of Hormuz, according to industry executives at a recent conference.
Europe's gas storage facilities are currently 67% full, the lowest level ever recorded for this time of year, and well below the EU's target of reaching 80% capacity by December. Executives at Norwegian energy company Equinor expect gas storage levels to reach 75% by November 1.
The Strait of Hormuz has been closed due to the war in Iran, resulting in around 36 million metric tonnes of supply being lost this year, according to Shell estimates. This has put pressure on demand and led to a significant increase in spot LNG prices in Asia, which have almost tripled this year, approaching $30 per million British thermal units (mmBtu).
Industry executives warn that a cold winter could lead to even higher prices, potentially reaching $40/mmBtu, equivalent to around $240 per barrel of Brent crude. This would likely force some consumers to reduce their demand.