Der Gaspreis knackt die 100-Euro-Marke: Europa droht ein ungemütlicher Winter

As the price of gas crosses the 100-euro mark, Europe faces a potentially uncomfortable winter. The competition among suppliers from the Middle East has become fierce, with Russia being discredited as a supplier. The ongoing war in Ukraine and tensions in the Persian Gulf further complicate the situation. The offer of gas on the global market is scarce, causing the gas price in Europe to soar this week to over 100 euros per megawatt-hour, the highest level in four years.

The TTF term price is still below 300 euros, but it is expected to rise with the onset of winter in Central Europe. The demand for gas is anticipated to increase, leading to further price hikes. Since the war began in February 2022, Europe has faced supply shortages multiple times. In response to sanctions against the Kremlin, EU countries have significantly reduced their imports of Russian gas.

As of January, imports of Russian liquefied gas, or LNG, have been completely banned. The Iran crisis further complicates the situation, as the blockade at the Hormuz Strait and Iranian attacks on passing ships prevent sufficient amounts of gas from Iran from reaching Europe, due to the damage to some of Qatar's facilities and the fact that Qatar's exports are mostly by sea.

The Argus Media data provider estimates that only a quarter of the pre-war volume of Qatar LNG reaches the global market. Increased demand from countries like China and South Korea adds to the competition, shifting shipments toward Asia and driving up prices. The situation is exacerbated by unexpected shutdowns at Norwegian gas production facilities, according to Warren Patterson, a commodities specialist at the ING bank.

In addition, the declining temperatures in the coming days in Europe are expected to increase the demand for gas. In Germany, half of all households heat with gas. Although the German storage facilities could provide relief, they are currently only 62 percent full, far below the five-year average of 88 percent. This is due to the increased gas prices in the summer, which made it unattractive for companies to stock up.

Many companies apparently hoped for a resolution to the situation in the Middle East, but it has not materialized. As early as several weeks ago, the German association INES warned of a potential shortage in the winter. The German storage company Sefe announced a new contract with the Geneva commodities trader Trafigura on Thursday, but it said it would have "no immediate impact" on storage levels.

The agreement with Trafigura, committing to annual deliveries of 30 terawatt-hours, is merely an extension of an older arrangement. Compared to 2022, when European storage facilities are set to hold 247 terawatt-hours, a further increase in inflation and a decline in industrial production are expected. This is already evident: the Norwegian fertilizer company Yara reduced production due to high gas prices.

In the Eurozone, the inflation rate in September was 3.8 percent, nearly double the European Central Bank's target of 2 percent, and further increases are expected. Despite the declining economic sentiment, industry and service companies surveyed by the European Commission expect higher sales prices in the coming three months. In response to the crisis year of 2022, European countries, especially Germany, have started importing gas from the US.

However, the US is no longer considered a reliable contractual partner after the threatened export ban on American diesel by Donald Trump. Nevertheless, the Argus Media data provider does not foresee a supply problem for Europe in the winter. However, the competitive bidding for the remaining quantities affects the gas bills of consumers.

The German government aims to build a strategic gas reserve to safeguard Germany against crises, but this does not address the issue of low fill levels in commercial storage facilities. There are solutions, though. Gas prices on energy exchanges have nearly doubled in a short time. Experts see no sign of relaxation. European industry is calling for relief in the cost of the electricity grid.

Diesel is expensive, and gas is expensive. Europe's storage facilities are poorly filled. Winter could bring a crisis similar to that of 2022, warns the renowned commodities analyst Jeff Currie in an interview.