Hormuz Closure Disrupts Europe's Winter Gas Plan

Europe faces a challenge in refilling gas storage before winter as the Strait of Hormuz closure threatens its plan to delay purchases. LNG imports are about 27% lower than last year, while Asian imports have risen. European storage is at 54%, below the 80% target by November.

Europe is facing a growing challenge in refilling natural gas storage before winter, with global competition for LNG cargoes intensifying and the Strait of Hormuz closure recurring. European governments had bet on delaying gas purchases after winter, but continued shipping disruptions and rising prices have made those bets riskier. Europe's LNG imports are about 27% lower than last year, while Asian imports have risen. European storage stands at about 54% of capacity, compared to a five-year average of 70%, and below the EU target of 80% by November. Spot prices in Northeast Asia have risen to around $22 per million BTU, and in Northwest Europe to $20.36. Baringa Partners warned that continued Hormuz closure until September could lead to a contraction of the UK and European economies. This coincides with the EU plan to end Russian gas imports by January 2027.