Analysts attribute the low storage levels to the abnormal heat, but this is only part of the continent’s natural gas problem. The storage injection season started from a weaker position to begin with. According to Energy Aspects estimates, on June 23, storage facilities held about 50 billion cubic meters of gas, or 46% of capacity—10.6 billion cubic meters below the level a year earlier and 15 billion cubic meters below the five-year average.
The weather only exacerbated the problem, preventing the gap—which had emerged long before the record-breaking temperatures—from being closed.
ADisappointing Summer
Typically, summer is a time for the European energy system to build up reserves. The break in the heating season and longer daylight hours reduce energy consumption, allowing gas to be injected into underground storage facilities (UGS). In this way, Europe creates a buffer in case of cold snaps, supply disruptions, or price spikes during periods of high demand.
But in the summer of 2026, this system failed. In June and July, a summer heatwave swept across much of the European continent. June became the hottest and driest month on record in Western Europe. Italy, Spain, and southwestern France found themselves in a veritable inferno, with temperatures peaking at over 46.5°C.
This heatwave dealt a double blow to the energy sector: on the one hand, demand for electricity rose as households and businesses turned on energy-intensive air conditioners; on the other hand, alternative sources were unavailable: low river levels led to the shutdown or reduction of hydroelectric generation and the complete or partial shutdown of nuclear power plants. As a result, gas had to be burned.
According to Kpler estimates, for the week ending June 28, gas-fired electricity generation in Europe rose 34% year-over-year and 28% week-over-week. In France, the increase was 155% year-over-year, and in the UK, 123%. Gas filled the very hours when the power grid needs flexibility: in the evening, when solar generation drops and demand for cooling remains high.
The gas storage filling season in Europe began in April. Since then, 33 billion cubic meters of gas have been injected into storage facilities, but the weekly rate in early August remained below the five-year average. Thus, the summer heat has become a factor that could lead to a winter energy crisis.
Geopolitics Complicates Matters Further
Geopolitics has also been on fire this summer—sometimes literally. Europe had hoped to make greater use of liquefied natural gas (LNG) to replenish its reserves, but Iran, in response to U.S. attacks, blocked the Strait of Hormuz, disrupting logistics and making the global LNG market less predictable.
LNG shipments from Qatar—considered one of the key players in the global gas market—passed through the Strait of Hormuz. While Iran and the U.S. are trying to negotiate a peace agreement, physical deliveries through the strait are severely hampered. The risk of disruptions is already changing buyer behavior; they are not only competing for current volumes but also trying to hedge against the possibility of a protracted conflict.
At the same time, Europe has already entered the final phase of completely phasing out Russian fuel. New contracts for Russian gas imports are already prohibited. Deliveries of Russian LNG under short-term contracts were scheduled to stop on April 25, 2026, while the ban on long-term contracts takes effect on January 1, 2027. In the fall of 2027, pipeline gas supplies will also be completely halted.
European countries were still purchasing Russian LNG during the summer. According to Kpler, in the first half of 2026, European Union countries purchased record volumes of liquefied natural gas, buying up nearly the entire output from the Yamal LNG project. However, this supply channel is already being shut down, both legally and politically.
From the perspective of energy independence, this reduces flexibility and limits room for maneuver: Europe needs to inject gas into underground storage facilities more quickly precisely when LNG is more expensive and less predictable.
The Economy Takes Its Toll
By abandoning Russian pipeline supplies, Europe has entered the global LNG markets, where it was met not only by new suppliers but also by new competitors. Gas no longer flows along the usual route, and prices depend not only on long-term contracts but also on demand from other consumers.
When it’s hot in Asia, demand for air conditioning and LNG rises. When supplies through the Strait of Hormuz are unstable, importers try to stock up in advance. If Europe lags behind in filling its storage facilities, it has to offer a price high enough to ensure that shipments go specifically to European terminals. Thus, Europe is now dependent on the global market, where prices react quickly to any new risk.
At the same time, the backwardation that has emerged in the global gas market further complicates the situation for Europe. Gas for delivery now or in the coming months costs more than gas for delivery later, for example, in the winter. This is an unfavorable situation for storage facilities. It means that gas must be purchased now at a high price and stored until winter, when it will have to be sold at a lower price. In such a situation, traders have no real incentive to fill storage facilities.
Why Backwardation Occurred
Gas for near-term delivery has become more expensive due to a physical shortage and the risk of supply disruptions. According to the IEA, the closure of the Strait of Hormuz affected LNG flows, which accounted for nearly 20% of global LNG supply. This sharply increased the value of gas for immediate or near-term delivery.
In addition, amid the heat wave, Europe has been forced to engage in a bidding war with Asia for so-called flexible LNG cargoes. From March through June, the Asian JKM premium over the European TTF averaged about $2.1/MBtu, which encouraged the redirection of flexible LNG cargoes to Asia.
Meanwhile, forward prices are lower because the market expects the situation to normalize. Winter forward prices partially reflect expectations that disruptions will end or become less severe: the Strait of Hormuz may reopen, supplies will stabilize, and high prices will curb demand.
In other words, spot gas is expensive because it is needed right now and its supply is at risk; winter gas is cheaper because the market hopes for a partial improvement in the situation later on.
Three Scenarios forEurope
Europe has managed to inject less gas into storage than usual at this time of year, but that does not necessarily mean it will freeze this winter. Several scenarios are currently possible, the likelihood of which depends on a number of conditions.
In a mild scenario, there will be no physical gas shortage this winter, but prices will likely remain above pre-crisis levels. This scenario assumes that the situation in the Strait of Hormuz will normalize, weather conditions will be close to normal, and Europe will manage to accelerate gas injection.
In the baseline scenario, storage facilities will enter the winter season below normal capacity, and demand will remain high. In that case, Europe will have to compete more aggressively with Asia for LNG, leading to a significant increase in gas prices and, consequently, electricity prices, which will put additional pressure on households and industry.
In a stress scenario, low inventories will coincide with a cold winter and prolonged disruptions in LNG supplies. According to Energy Aspects’ estimates, in the absence of Qatari LNG and in the event of cold weather, the average daily gas price in Europe from November through March could rise to 110 euros per MWh, and inventories could drop to 10% by the end of March. This is not the base-case scenario, but it illustrates just how costly the effort to maintain higher storage levels could become.
Europe has reduced gas consumption, increased renewable energy generation, and expanded its LNG infrastructure. But this year, the gas crisis did not come with the winter cold, but with the June heat, so the safety margin may still not be sufficient.
Prepared based on materials from Profinance
