Europe's LNG Storage at Record Low as Hormuz Closure Looms

Global liquefied natural gas (LNG) prices are expected to surge this winter as Europe faces its lowest LNG storage levels in years, and North Asia's competition for supply intensifies due to the ongoing closure of the Strait of Hormuz.

The situation is particularly concerning, as European Union natural gas stocks are currently at 67% capacity, a record low for this time of year. Executives from Norwegian major Equinor warn that gas stocks could reach only 75% full by November 1, falling short of the EU's target of 80% capacity by December.

The Strait of Hormuz closure has resulted in a loss of 36 million tonnes of LNG supply this year, according to Shell. Cheniere Energy Chief Commercial Officer Anatol Feygin noted that unlike the Ukraine crisis in 2022, European countries did not build up stockpiles during summer due to a lack of financial incentives.

Industry executives and analysts predict that prices could rise by a third, with Asia's spot prices already nearly tripling to close to $30 per million British thermal units. If it's a colder winter than normal, prices may reach $40/mmBtu, equivalent to about $240 per barrel for Brent.