Europe faces worst winter gas supply crisis in 15 years

European energy markets are coming under mounting pressure as extreme weather, prolonged drought and geopolitical tensions threaten gas supplies ahead of winter. The combination of a fourth heatwave since May, critically low water levels on the Rhine and ongoing disruptions to the global liquefied natural gas market has raised concerns that Europe could enter the heating season with its weakest gas reserves in more than a decade.

Gas storage across the European Union stood at about 54% of capacity at the end of July, around 12 percentage points below the five-year seasonal average, according to Gas Infrastructure Europe. Energy Aspects said inventories were roughly 15 billion cubic metres below normal levels, meaning Dutch TTF gas prices would likely need to remain elevated through the summer to encourage additional storage injections.

Reports by the Financial Times and the World Economic Forum warned that Europe risks entering winter with its lowest gas stockpiles in at least 15 years. The head of British Gas also warned that the United Kingdom could face energy shortages this winter as wholesale gas prices climbed to their highest level in a year. Dutch TTF natural gas futures rose above €60 per megawatt-hour in July, while Trading Economics data showed prices had increased by nearly 37% over the previous month.

Extreme weather is adding further strain to Europe’s energy system. Meteorologists expect a fourth major heatwave to push temperatures above 40°C across much of the Mediterranean region. High river temperatures are limiting cooling capacity at French nuclear power plants, reducing electricity generation, while persistent high-pressure systems are also weakening wind power production.

The drought is disrupting inland transport as well. Reuters reported that water levels at the Rhine’s critical Kaub bottleneck were expected to fall to around 20 centimetres by the end of the week, forcing cargo barges to operate at only 15% to 20% of their carrying capacity. Deutsche Welle cited the Kiel Institute as estimating that the disruption could reduce Germany’s third-quarter economic output by between 0.1% and 0.2%.

Global LNG supply remains under pressure following disruptions linked to the conflict involving Iran. Military strikes by the United States and Israel in late February prompted Iran to close the Strait of Hormuz, interrupting around 20% of global LNG shipments. An Iranian attack on Qatar’s Ras Laffan LNG facility in March damaged two of its 14 liquefaction trains, tightening supply further.

S&P Global said expected global LNG supply growth for 2026 has dropped sharply from 11% to just 1%. Goldman Sachs also warned that declining natural gas inventories in China could lead to stronger LNG imports before winter, increasing competition between Asian and European buyers. If disruptions around the Strait of Hormuz continue, Europe could face stronger price increases and greater difficulty securing sufficient gas supplies for the peak heating season.