The European Union's natural gas storage facilities have fallen to their lowest level for this time of year in almost 20 years because of the war in Iran, and the bloc is counting on winter shipments of liquefied natural gas (LNG) to make up the shortfall, Bloomberg reported on Tuesday, August 4.
With just months to go before the heating season begins, storage sites across the bloc are only about 57% full, the lowest reading for this time of year since record-keeping began in 2009.
A spokesperson for the European Commission told Bloomberg that the EU could count on significant reserve capacity for LNG imports, which would let it ramp up supplies during the winter months and provide the flexibility needed on top of drawing gas from storage.
LNG imports to Europe have been declining since April, after the war in Iran disrupted around a fifth of global supply, while buyers in Asia have been actively snapping up the cargoes that remain available.
Europe's LNG Import Capacity
Europe has significantly expanded its capacity to import LNG in recent times, and most market participants do not expect a physical shortage of gas. However, the region risks paying a much higher price in winter, when demand rises sharply, if global supply stays constrained. It will also have to compete for cargoes with Asian countries and other regions.
Iran War Disrupts Global LNG Market
The war waged by the United States and Israel against Iran hit the global LNG market hard. Qatar, one of the world's largest LNG exporters, was forced to shut its liquefied gas export plant after Iranian strikes on the Ras Laffan industrial park.
European Gas Prices Surge
Gas prices in Europe have jumped 50% over the past month and have nearly returned to the peak levels recorded in the early days of the Middle East war. On Wednesday, the price of the TTF benchmark, Europe's main gas trading reference, exceeded 62 euros per megawatt-hour, or roughly $750 to $755 per thousand cubic metres. Since April, gas imports into Ukraine have dropped sharply because of the high prices in Europe.
Dan Jørgensen, the EU's energy commissioner, called on member states to start filling their gas storage facilities early to avoid competing with one another for supply.
