Europe Faces Elevated Gas Prices to Secure Winter Supplies
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Europe Faces Elevated Gas Prices to Secure Winter Supplies
- Goldman Sachs analysts estimate that European gas prices may need to surpass €100 per megawatt-hour in December 2026 to adequately rebuild winter inventories, particularly if Middle East supply disruptions persist into next year.
- This forecast, reiterated by analysts Samantha Dart and Laura Cyr, highlights concerns over reduced liquefied natural gas (LNG) shipments due to ongoing tensions in the Middle East and disruptions in the Strait of Hormuz.
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Europe is facing a challenging period for natural gas supply, with analysts from Goldman Sachs suggesting that prices could reach over €100 per megawatt-hour (MWh) by December 2026. This projection is based on the need for Europe to attract sufficient liquefied natural gas (LNG) from Asia to replenish its winter inventories, especially if disruptions to Middle East energy exports continue into 2027.
The Strait of Hormuz, a critical chokepoint for global energy flows, has experienced disruptions, impacting approximately 20% of global LNG exports. This has led to a slower-than-expected recovery in Persian Gulf LNG exports, with Goldman Sachs now anticipating normalization in October, a delay from their previous estimate of July.
As of mid-August 2026, EU gas storage facilities were around 60-61% full, which is below levels recorded in the same period over the past five years. Europe entered the 2026 gas injection season with its lowest storage levels since 2018, at 31 billion cubic meters (bcm). The EU had previously aimed for 90% storage capacity by November 1, but for the 2026 winter season, this target was relaxed to 80% with some flexibility for member states. However, even with this relaxed target, the current pace of injections is slightly behind what is needed to reach 80% by November 1.
Wholesale gas prices in Europe have already seen a significant increase, jumping over 120% since the beginning of 2026, with the benchmark Dutch TTF hub crossing €63.7 per MWh in mid-August. This surge is attributed to a combination of factors including extreme summer heat increasing demand for gas-fired power generation, reduced hydropower and nuclear output, and the ongoing supply disruptions. Goldman Sachs had previously raised its forecast for Dutch TTF gas prices for the third and fourth quarters of 2026 to €60 and €53 per MWh, respectively, up from earlier forecasts. They also noted that risks to near-term forecasts remain skewed to the upside, recommending that gas users hedge against potential winter price spikes.