Europe enters this winter with thinner buffers in gas, diesel and emergency oil
Thinner buffers make the price more sensitive to each disruption, in both directions.
A single base case cannot show a buyer how wide that range has become.
Europe is heading into the heating season with low gas reserves and continued disruption in the Middle East. On 24 October, EU gas storage stood at 74.7%, and Germany, which holds the largest storage capacity in Europe, stood at 61.5%, according to GIE AGSI+ data. Earlier in the month, using data for 3 October, IEEFA described the EU level as the lowest for the season since its records begin in 2011. Iran has declared the Strait of Hormuz closed again. Recorded transits fell to four on 18 October against roughly 85 a day before the war, according to IMF PortWatch, although Washington maintains that the shipping lanes remain open.
The bill is already visible. Europe has paid an extra €100bn for imported fuel this year, Commission President von der Leyen told the European Parliament on 6 October, without receiving a single additional molecule. The EU Institute for Security Studies puts the extra cost of energy since 2022 at more than €900bn, even as total demand has fallen. European gas prices have more than doubled since the war in Iran began, and the Commission has asked consumers to cut gas and electricity demand.
Some relief is arriving, but it is partial. More US LNG is heading to Europe instead of Asia, which shortens voyages and has brought Atlantic freight rates back to their prewar levels. “I expect Europe to remain the principal destination for marginal U.S. LNG,” independent shipping analyst Pratiksha Negi told Reuters, pointing to the storage deficit. Around 55 new LNG carriers were delivered in the first seven months of the year, with 40 to 45 more due by year end. Those ships add transport capacity; they do not replace the Gulf volumes that are missing.
Energy Commissioner Dan Jørgensen has warned of “very high” oil and gas prices this winter while saying he expects no supply problems. Read alongside the storage data, our reading is that the main risk this winter lies in the price of supply rather than in its physical availability.
Two sets of forces now act on that price. Disruption in the Gulf, low stocks and a cold winter would push prices up. Recovering Gulf supply, weaker industrial demand and a mild winter would pull them down. Analysts have modelled both. For gas alone, published views range from a Citi base case of €56 per MWh for the fourth quarter to a Goldman Sachs stress scenario of €150.
A base case describes the middle of that range. In our view, purchasing exposure sits at its edges: in the volumes that are still unpriced when a disruption arrives, or when prices fall away after a buyer has fixed. Thinner buffers make those edges wider. That is why this edition looks at the range in each market rather than at a single number.
