Europe's gas storage problems are projected to persist well beyond the winter season, potentially lasting into 2027 and beyond. The continent entered the cold season with inventories less than 75% full, significantly below historical averages due to disrupted liquefied natural gas supplies from the Middle East linked to the US-Iran conflict. According to Bloomberg NEF's base case, if the Strait of Hormuz remains closed to LNG shipments until the end of March, European inventories could plummet to just 17% full by spring, assuming normal weather conditions.
In a colder-than-average winter scenario, figures could drop as low as 10%, marking the lowest level in over a decade per the International Energy Agency. This situation forces Europe to purchase additional fuel during the summer refill period, potentially at higher prices if Middle East tensions continue. The region may still face tight markets in 2028, impacting economic competitiveness.
Furthermore, the European Union and UK are finalizing a deal to link their emissions markets, aiming to boost liquidity and save companies millions in carbon border taxes. Concurrently, China's weakening domestic gas prices may free up seaborne cargoes for other markets. A Houthi attack on Saudi Aramco facilities in Riyadh further underscores ongoing regional instability affecting global energy supplies.
Source: Bloomberg Markets · Summarized by HeadlinesBriefing