Rebuilding storage reserves that dropped to their lowest levels on record points to a prolonged period of above-average gas prices for homes and businesses across the continent — one that analysts expect to persist through at least the next twelve months, independent of how the Iran situation resolves or how severe the coming winter proves to be.
Benchmark natural gas prices across Europe have climbed by more than 150 percent over the course of this year, a rise tied to transit disruptions through the Strait of Hormuz that have held back roughly one-fifth of worldwide liquefied natural gas flows originating from Qatar and the United Arab Emirates — supplies directed primarily toward Asian markets. Export growth from nations such as the US, Canada, and Nigeria has provided some offset, yet the reduced flow of LNG from Middle Eastern producers has sharpened rivalry for spot cargoes that would otherwise have reached European buyers, leaving storage replenishment over the summer months harder to achieve.
Forecasts from analysts and industry watchers put European gas storage at somewhere between 75% and 78% capacity by 1 November — the point at which the annual refilling window is generally considered to close and reserves take on a heavier role in covering winter heating demand. That figure sits roughly ten percentage points under the five-year average, with the starting point already lower than usual.
Yuriy Onyshkiv of LSEG noted that typical winter weather across north-west Europe alone could draw storage reserves down to around 20% by April, and any sustained interruption to shipping through the Strait of Hormuz on top of that would place considerable replenishment demands on suppliers — a tightness he said stretches not only through the coming winter but carries into the summer of 2027 as well.
According to Moutaz Altaghlibi, a senior energy economist at ABN Amro, the region has enough supply to avoid an outright shortage yet falls short of maintaining an adequate operational buffer. Roughly a quarter to nearly a third of the natural gas burned across the EU during winter months is drawn from storage facilities, meaning the bloc relies heavily on pipeline flows and LNG shipments — chiefly from Norway and the United States — to meet demand; Altaghlibi noted that any interruption to those flows carries the potential to push prices higher, while sustained rivalry from Asian buyers for LNG cargoes is expected to keep costs elevated.
ABN Amro noted that an unusually cold winter could draw European storage reserves down to somewhere between 10 and 15 percent, a threshold Altaghlibi characterised as placing considerable strain on the subsequent refilling season.
The period draws comparisons to 2022, when wholesale gas prices across European markets topped €350 per megawatt-hour as pipeline flows from Russia fell away following the launch of military operations against Ukraine. Prices breaching €100/MWh — a threshold roughly 25% above where the market stands today — remain within the range of plausible outcomes, even as the prevailing view among energy analysts stops well short of expecting a repeat of past extremes.
Household energy bills are not expected to reflect the jump in wholesale gas prices recorded this year until 2027, given that retail tariffs are generally locked in for a set period before coming up for renewal. Data from Verivox, a price comparison platform operating in Germany, show that natural gas rates offered to new customers have climbed by 55% over the course of this year, moving from 8 euro cents up to 12.4 euro cents for every kilowatt-hour consumed.
When contracts reach their renewal dates, customers holding existing agreements should anticipate higher rates — with a Verivox representative noting that prevailing market conditions put price adjustments of between 10 and 20 per cent within a plausible range. Cornwall Insight, an energy consultancy, has projected that the household energy price cap — already at its highest point in three years following an October adjustment — may rise by a further 16% when it is reviewed in January, with the firm's principal consultant Craig Lowrey noting that market instability tied to low gas reserves and the conflict involving Iran shows no clear sign of abating in the near term.
Maintaining a competitive footing has posed an ongoing challenge for European industries, given that natural gas prices across the bloc were running at roughly three times the level seen in the United States even before the most recent supply disruptions — a gap that has led a portion of analysts to call for a more assertive policy response from the EU. Early in the conflict, the EU tabled measures to cut electricity levies and coordinate gas storage timelines among its members; the bloc's energy commissioner has since urged those governments to lower their gas use as available supplies tighten.
Following a drop in Russian gas supplies in 2022, the bloc rolled out a package of responses that included an initiative aimed at accelerating the expansion of renewable energy and reducing reliance on imported fossil fuels, according to Ana Maria Jaller-Makarewicz of the Institute for Energy Economics and Financial Analysis. She described the situation as one that had been unfolding gradually, and expressed concern that its full scale had not yet been grasped; Andreas Schroeder, who leads gas and LNG analytics at ICIS, noted that a resolution to the US-Iran standoff was anticipated by spring, but added that even accounting for that, gas markets appeared to be underpricing the demand that European storage refilling would place on supplies.
A scheduled prohibition on Russian liquefied natural gas entering the bloc, set to take effect at the start of 2027, would place additional pressure on available supplies. Rabobank energy strategist Florence Schmit noted that pricing across trading floors may not be fully accounting for the pace at which LNG output capacity is building up in other parts of the globe.
Rabobank lifted its near-term price projections while holding its full-year 2027 outlook steady at around €45/MWh, with Schmit noting that the bank's view for 2027 and 2028 remained on the conservative side yet still sat approximately €20/MWh above where earlier projections had placed that period.
According to BNP Paribas commodities analyst Jason Ying, a particularly intense El Niño pattern this year has the potential to drive elevated wind speeds and warmer-than-average winter conditions across Europe, which would lift wind power output and put downward pressure on natural gas demand and pricing. Ying noted that supply-side disruptions affecting LNG throughout the year would need to unwind gradually, with the analyst projecting that pricing and availability conditions are unlikely to return to pre-conflict norms before 2028.
