Strait of Hormuz and Europe's Winter Nightmare: Will the 2022 Gas Crisis Repeat?

At a Glance. European gas prices: near their highest level since December 2022. European gas storage: as of October 14, only 74% of capacity was filled, compared with a five-year average of about 86% for this time of year. Europe's challenge: competing with Asia for supply […]

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Natural gas prices in Europe are still close to their highest level since late 2022. The lack of supply of liquefied natural gas (LNG) from Qatar, along with the European Union's efforts to fill depleted reserves before the onset of winter, has put additional pressure on the region's gas market.

The price of gas futures contracts for delivery next month on the Dutch TTF market, which is the reference index for gas trading in Europe, decreased by 1 percent by 9 am on Thursday, Amsterdam time, following the drop in the price of crude oil futures contracts.

However, gas prices are still at their highest levels since December 2022, reaching $96.56 (€86.03) per MWh; A period when Europe was going through its first winter without a major part of Russian gas supply through pipelines.

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According to the data of the Gas Infrastructure Europe Institute, until October 14 (22 Mehr), only 74% of the gas reserves of the European Union were filled. This figure is much lower than the five-year average of about 86% for this part of the year; That too in the situation that the start of the winter heating season is not far away.

Gas prices in Europe remain at levels seen during the energy crisis of 2022 and 2023 as supply concerns mount. The main reason for this situation is that the supply of LNG from the Middle East, unlike the flow of oil exports, has not yet recovered as quickly.

"Unfortunately for the natural gas market, we have not seen the same improvement in LNG supply flows from the Persian Gulf as we have seen in oil supply," Warren Patterson, head of commodity strategy at ING Bank, wrote in a note on Thursday.

The volume of LNG supply from the Middle East is still about 80% less than the amount recorded last year.

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Pointing to this situation, Peterson said: "The market is more and more accepting of the possibility that Persian Gulf LNG will remain away from global markets for most of the Northern Hemisphere winter."

He added that Europe and Asia will continue to compete with each other for LNG cash shipments; An issue that supports the price of natural gas and the price of LNG cash transactions and prevents their significant reduction.

If winters get colder in Europe, Asia or both, or if there is a new supply disruption, prices will be exposed to further jumps.

The consulting company Timera Energy also warned in the winter outlook of the gas market that it published this week, considering that Europe starts the winter with lower reserves than usual and Asia has also used a major part of its flexibility capacity on the demand side, there is a risk of price jumps at the end of winter.

Analysts of this company wrote: In our vision for the winter of 2026-2027, it is assumed that the Strait of Hormuz will remain closed until the end of the fourth quarter of 2026 and its reopening will be done gradually during the first quarter of 2027. In such a scenario, if European gas reserves reach low levels, the possibility of a sharp rise in prices in late winter would be particularly high.