Europe is facing a severe energy crisis ahead of winter due to supply disruptions in the Strait of Hormuz and the European Union's (EU) upcoming ban on Russian gas imports at the start of the year. Experts point out that gas storage levels have fallen to their lowest in 15 years.
Stocks and Prices
According to current data, gas storage facilities in Europe are only at 48 percent capacity. This figure is expected to reach only 76 percent by the end of October, when the refilling season ends. Prices have surged from 31 euros per megawatt-hour before the war to 42 euros per megawatt-hour, while the peak seen in March was over 60 euros. The EU's decision to ban Russian gas imports, set to take effect at the beginning of next year, further increases uncertainty.
The Indirect Impact of Hormuz
According to oil and energy expert Amer al-Shubaki, supply disruptions in the Strait of Hormuz do not directly affect Europe, as the continent's dependence on the strait is below 10 percent. Nonetheless, the indirect impact has been significant. The disruptions have led to a supply shortage in the liquefied natural gas (LNG) market and rising prices. This, in turn, has caused buyers in Asia to pay higher prices, drawing ships away from Europe; this competition has driven Europe's storage levels to historic lows.
Europe's Difficult Choice
According to al-Shubaki, Europe is caught between two bad options: either enter winter with low stocks, risking energy security and heating for its people, or purchase gas at high prices to fill storage, which would further strain inflation and already tight government budgets. The expert notes that alternative energy projects are unstable and unreliable, warning that a drop in wind energy during winter could deplete the continent's remaining stocks.
The Worst-Case Scenario
It is stated that Europe, which ended last winter with storage levels below 30 percent, could face economic turmoil and social unrest if price increases are passed on to citizens. If governments bear the costs, this would add a new financial burden on top of those from the COVID-19 pandemic, energy support during the Russia-Ukraine war, high inflation, and interest rates.
Al-Shubaki predicts that the gas market, undergoing a transformation in global energy security, will not return to normal before 2027 due to rising demand. The expert said, "If shipments from the Gulf stop or remain limited, the worst-case scenario is that all economic sectors in Europe and Asia could come to a halt, and substances like sulfur and helium, which are extracted alongside gas, could be disrupted, spilling over into the technology and food sectors."
