Will European Gas Prices Keep Rising This Winter?

European gas prices are poised to remain high this winter due to disruptions in liquefied natural gas (LNG) supplies from the Middle East and low storage levels in Northwest Europe, according to Goldman Sachs Research. As of September 21, LNG prices in Europe had surged about 70% since July, reaching €73 per megawatt hour (MWh).

Commodity analysts predict prices will average €70/MWh during the fourth quarter of 2026, far exceeding the previous range of €30–€60/MWh. This surge in prices is attributed to a reduced flow of LNG from the Persian Gulf, which is only at 15%-25% of its pre-war levels. Samantha Dart, co-head of Global Commodities Research, explains that if Middle East exports improve gradually, European gas prices may stabilize around €70/MWh by the end of 2026.

However, if exports remain low, prices could skyrocket to €100/MWh or higher to deter competition from other LNG importers. Heating demand in winter accounts for about 12% of storage capacity, with gas inventories in Northwest Europe only at 19% of capacity by the end of March. While crude oil exports from the Persian Gulf have recovered faster than LNG exports, a lack of spare LNG tanker capacity and increased danger for crew members contribute to slower LNG supply adaptations.

Despite this, LNG exports from the Strait have already increased significantly since June. Meanwhile, European industrial clients and investors have shown reluctance to hedge against higher gas prices, citing moderate price levels since the conflict's onset.