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) ban on Russian gas imports that will take effect at the beginning 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 in Europe is only at 48% capacity. By the end of October, when the refill season ends, this rate is expected to reach only 76%. Prices have jumped from the pre-war level of €31 to €42 per megawatt-hour; the peak seen in March was above €60. The EU's decision to ban Russian gas imports, set to take effect early next year, further increases uncertainty.
Indirect Impact of Hormuz
According to oil and energy expert Amer al-Shubeiki, supply disruptions in the Strait of Hormuz do not directly affect Europe; the continent's dependence on this strait is below 10%. Nevertheless, the indirect impact has been significant. The disruptions led to a supply contraction in the liquefied natural gas (LNG) market and rising prices. This caused buyers in Asia to pay higher prices, diverting shipments that would have gone to Europe; this competition drove European stocks to historic lows.
Europe's Difficult Choice
According to Shubeiki, Europe is caught between two bad options: either enter winter with low stocks, risking energy security and heating for the population, or buy gas at high prices to fill storage, which will further strain inflation and already tight government budgets. Noting that alternative energy projects are unstable and unreliable, the expert warns that a drop in wind energy during winter could consume the continent's remaining stocks.
Worst-Case Scenario
Europe, which ended last winter with less than 30% storage, could face economic turmoil and social unrest if price increases are passed on to citizens. Governments absorbing the costs would add a new financial burden on top of the COVID-19 pandemic, energy support during the Russia-Ukraine war, high inflation, and interest rates.
Shubeiki 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 would be a halt to all economic sectors in Europe and Asia, and the disruption of substances like sulfur and helium obtained with gas could spill over into the technology and food sectors."
