Europe faces a gas shortage this winter due to lower global production and reserves being run down due to the Iran war, an analyst has warned.
Liquified natural has (LNG) is a key part of the overall energy mix for the UK and Europe. On the continent, natural gas as a whole accounts for around a fifth (21 per cent) of total energy consumption, according to Eurostat’s research, with LNG representing around 40 per cent of that gas usage in 2024.
An estimated 89 per cent of Europe’s overall gas supply in 2025 came from outside the EU – including the UK – and analysts at Wood Mackenzie have cautioned that the continent “is approaching energy crisis territory.”
Research from the firm shows European inventory is “only just above 50 per cent, an historically low level” for this period of the year.
“Low European inventories, strong Asian demand and limited new LNG supply growth almost guarantee elevated prices through this winter and into 2027,” said Massimo Di Odoardo, Wood Mackenzie’s vice president of gas research.
“European storage will only reach 75 per cent capacity at best by 1 November. That’s well below the 90 per cent average of the past five years ahead of winter.”
However, Mr Di Odoardo said the situation was not “2022 all over again” – with European gas prices “nowhere near” as high as when Russia invaded Ukraine.
The UK can only store around an estimated 5 per cent of its own annual total demand, relying heavily on imports. Natural gas accounts for around a third of the UK’s overall energy mix, with less than half of that being domestically sourced gas.
More than a third (35 per cent) comes from Norway, with the remainder being LNG imports, notably from the US and Qatar – meaning this gas shortage may impact around 7 per cent of the UK’s total annual energy usage.
Even though the UK uses Norway rather than the EU as a supplier, European stock levels running low could drive up the price by the EU outbidding others to raise their supply levels, directly raising wholesale prices and threatening supply stability elsewhere.
Europe’s supply shortage is compounded by two key factors, the first is a ban on buying Russian gas, which is phased across several years, set to be a full ban by the end of this year for LNG.
The second is the Qatari LNG plant, Ras Laffan, which was damaged by Iranian missile strikes in March and which previously accounted for around a fifth of the global production total. The damage in Qatar is expected to take years to fix fully.
“Lower levels of gas storage leaves the continent more exposed to gas price rises if there are further supply disruptions, for example from conflict in the Middle East or if there’s a particularly cold winter. And that could impact the UK too as gas prices are strongly linked,” said Jess Ralston, head of energy at the Energy and Climate Intelligence Unit.
“The UK has comparatively limited gas storage capacity, but significant LNG import infrastructure, which gives it a different kind of resilience. During the Ukraine energy crisis, the UK’s LNG terminals played an important role in bringing gas into Europe, effectively acting as a conduit to neighbouring markets – but relying on LNG also comes with risks of volatility as competition for cargoes could be intense this winter as global supply remains so uncertain.
“The lesson from recent years is that relying on gas in any form leaves us exposed to the actions of people like Putin and Trump. Energy security that lasts will come from reducing demand for gas altogether through electrification and clean power.”
Chris O’Shea, the boss of British Gas, last week said: “European gas storage levels are low. UK gas storage levels are incredibly low. If it’s not a warm winter, then there’ll be problems, and the problems will be associated with having less gas in storage.
“If I was the prime minister or I was in the Cabinet, I would want to ensure I’ve done everything I could to reduce the chance of not having enough energy over the winter.”
