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The energy crisis triggered by the Iran war is slowing down Europe’s ability to refill gas stores cheaply, prompting warnings of higher costs this winter that will compound the continent’s economic challenges.
Summer prices have risen to winter levels, driven both by supply constraints stemming from the Middle East conflict and the EU target to fill storage supplies across the bloc to 80 per cent, according to traders and companies.
“The filling of gas storages will be slower than it could be if market conditions were normal,” said Henning Gloystein, an expert at Eurasia. The lack of market incentives to restock creates the risk that gas “will need to be bought in the spot market during winter at higher prices”.
The European Commission on Wednesday is expected to maintain its guidance allowing member states to fill to 80 per cent, while leaving open an option to fill to 75 per cent, as a means to ease pressure on prices. Last year, the non-binding filling target stood at 90 per cent and eight countries met the target by the start of November.
The Commission is also proposing coordinating gas purchases among member states to avoid price surges, according to an energy plan to be presented on Wednesday.
Gas storage systems are integral to the bloc’s energy security, providing almost one-third of gas in winter months, but have ended the winter more heavily depleted than in recent years.
Traders usually buy gas for storage once the cold weather subsides, in the expectation they will be able to sell at higher prices during winter.
But the market is dissuading traders, with the Netherlands’ reserves filled at just 7.4 per cent and Europe’s largest gas consumer Germany at 23.5 per cent. Across the EU, stores are currently 30 per cent full, according to Gas Infrastructure Europe data.
Uniper, one of Europe’s largest traders, warned that refilling targets would not be met by the end of the year unless market conditions changed.
“The scope for action […] is narrowing the longer time passes,” said a Uniper spokesperson. “Under today’s conditions, the existing market framework is insufficient to ensure reliable and timely filling of the storage facilities.”
Still, there is time for the market to correct. Tom Marzec-Manser, director for European gas at Wood Mackenzie, said he expected the market to change, with either current prices falling or forward prices rising to incentivise storage.
“Prices will align to make that incentive possible, if not now they will do as the summer progresses,” he said. Wood Mackenzie believes that by the end of October, stocks will be in the mid-80s per cent, in line with targets, with Marzec-Manser noting that the current situation has happened before and resolved itself.
The Commission set the gas storage targets after Russia’s full-scale invasion of Ukraine and a cut-off in Russian gas supplies led to fears of energy shortages across the continent in the winter of 2023.
But those targets also pushed up summer prices in recent years — a trend exacerbated by the Iran war. European gas prices are at €39.51 per megawatt hour for July 2026 contracts, up from about €33 the previous year, compared with highs of €39.66 for December 2026 contracts.
Still, that marks an improvement from last month, when European gas prices peaked at €61.45 for July deliveries.
Cristian Signoretto, president of trade group Eurogas and head of gas trading at Eni, said there was a “patchwork” of stocks across the continent, with countries such as Italy and Austria having higher reserves than the likes of Netherlands and Germany.
In some countries such as France, gas traders have pre-booked capacity in storage facilities and were “obliged” to replenish them, he said. In some, national bodies were able to step in and fill storage as a “last resort”, he added.
Some EU officials argue that high prices should be accepted in exchange for energy security. Countries including Italy, Spain and France are maintaining storage targets above the 80 per cent objective despite the Commission’s guidance.
Eurasia’s Gloystein said: “If this persists for another couple of weeks, the authorities will have to intervene” either by lowering gas stores or setting penalties for failure to fill them. But he added that Europe was unlikely to face shortages next winter.
“Rich countries will just pay what’s necessary to secure supply. So the shortages will occur in poorer countries that are literally priced out by Europe and wealthy north-east Asia,” he added.
