Low EU gas stocks leave reduced buffer against supply shocks: IEA

Europe is heading into the 2026-27 heating season with gas storage at its lowest level in more than a decade, leaving it with a reduced buffer against supply disruptions and potentially increasing its reliance on global LNG supplies to meet winter demand, the International Energy Agency said Nov. 3.

In its Global Gas Security Review 2026, the IEA said low European storage levels, combined with limited storage options in several LNG importing countries in Asia and South America, could intensify the competition for a scarce number of flexible LNG cargoes in the coming months.

This, it said, could raise spot prices, especially during periods of high demand.

IEA simulations showed EU storage could fall below 10% of working capacity by end-March 2027 under a scenario combining colder-than-average weather and continued disruption to LNG flows through the Strait of Hormuz.

"This would leave the European market particularly exposed to events, whether additional cold snaps, technical outages or other supply disruptions, since the rate at which gas can be withdrawn from storage sites tends to decline once fill levels fall below 30% of working capacity," it said.

"Moreover, low storage levels would substantially increase the need for injections through summer 2027, potentially extending market tightness into the following year."

Global demand

Global gas demand is expected to fall by about 65 billion cubic meters this year, the third annual contraction since 2020, driven by demand destruction in the Middle East, lower industrial gas consumption in Europe and gas-to-coal switching across Asia, the IEA said.

The power, energy and industrial sectors account for about 90% of the projected full-year demand decline, with gas-intensive industries such as fertilizer production among the hardest hit as prices surged, the agency said.

Asia's natural gas demand is also set to decline in 2026, with Chinese fundamentals deteriorating amid high global gas prices and a subdued domestic economy.

"First estimates indicate that natural gas demand in the Asia-Pacific region fell by more than 1%, or 10 Bcm, year on year in the first nine months of 2026," the IEA said in the report.

Supply shock

The supply shock at the heart of the outlook stems from the effective halt to LNG flows through the Strait of Hormuz, which reduced loadings from Qatar and the UAE by more than 60 Bcm between March and October, the IEA said.

Non-Gulf LNG production grew 14%, or more than 40 Bcm year over year, in the same period, offsetting about two-thirds of the Gulf shortfall. Global LNG supply is now projected to fall 3%, or almost 20 Bcm, in 2026, the steepest annual decline on record, it said.

The disruption has driven European and Asian gas prices to their highest levels in four years. European TTF spot prices rose almost 70% year over year to an average of close to $20/million British thermal units between March and October, according to the IEA.

Platts, part of S&P Global Energy, assessed the month-ahead Dutch TTF benchmark at €104.90/megawatt-hour Oct. 28, its highest since December 2022. The December 2026 contract hit an intraday high of €97.76/MWh Nov. 3, up more than 3% from the previous settlement, reflecting growing trader anxiety over the winter supply outlook.

Asian spot LNG prices told a similar story, rising almost 80% year over year to an average of $21.50/MMBtu over the same March to October period, the IEA said.

Platts assessed the December JKM, the benchmark price reflecting LNG delivered to Northeast Asia, at $33.911/MMBtu Nov. 2, just below the Oct. 30 high of $34.076/MMBtu and also the strongest reading since December 2022.

Four key North American liquefaction projects have reached final investment decisions since March, including CP2 Phase 2, with a peak capacity of 40 Bcm/year, and LNG Canada Phase 2, with a capacity of 19 Bcm/year.

However, cumulative LNG supply losses between 2026 and 2030 are estimated at 150 Bcm, equivalent to 15% of new supply expected globally over that period, the IEA said, adding that any meaningful market relief is unlikely before the end of the decade.