Europe risks running out of gas — Reuters
Photo: Europe could face a gas shortage if the Strait of Hormuz remains blocked for an extended period (Getty Images)
Europe could face a critical gas shortage if shipping disruptions through the Strait of Hormuz continue for another 1 to 3 months, according to Reuters.
Data from Gas Infrastructure Europe shows that gas storage facilities across Europe are currently filled to just over 35%, which is below the seasonal norm of about 50%.
Member states must build up a gas buffer over the summer in the Northern Hemisphere to meet the EU’s storage target of 90% between October and early December.
"If the war stopped tomorrow, with free flow to the Strait happening quickly, we could come to an acceptable, but tight storage level of 75%, but if the closure continues for one to three months, it could become critical," says Equinor Senior Vice President for Gas & Power Trading Helle Ostergaard Kristiansen.
The report models a scenario in which Europe would have to seek alternative supply sources amid fierce competition with Asia for limited volumes of LNG on the global market. This would inevitably lead to a sharp spike in prices and the need for forced reductions in industrial gas consumption.
At the same time, analysts note that underground gas storage facilities in Europe are currently at high levels thanks to mild winters, giving the region some margin of safety in the event of short-term geopolitical shocks.
Hormuz Strait blockade
The situation in the Middle East remains extremely tense due to Iran’s prolonged blockade of the strategic Strait of Hormuz.
Due to the war in Iran, global oil reserves are being depleted at an unprecedented rate. In the two months since the strait was effectively closed, supply losses have exceeded 1 billion barrels, creating risks of shortages and sharp spikes in fuel prices.
Today, May 22, global oil prices have risen but remain on track for a weekly decline, all due to uncertainty surrounding US-Iran negotiations and the blocked Strait of Hormuz.
At the same time, countries in the region are seeking alternative logistics solutions for energy exports. In particular, the UAE has found a way to bypass the Strait of Hormuz and double oil exports by accelerating construction of the new West-East oil pipeline to the port of Fujairah in the Gulf of Oman.
