The escalating conflict in the Middle East due to the US-Israeli war with Iran is tightening global liquefied natural gas (LNG) availability and constraining Europe's ability to refill storages which depleted to their lowest since 2022 over the summer, the European Network of Transmission System Operators for Gas (Entsog) said on Thursday.
The conflict between the US-Israel alliance and Iran has shut the Strait of Hormuz, a narrow waterway that normally carries about a fifth of global LNG supplies, to most ships, resulting in a tighter supply outlook and higher gas prices.
"Europe enters the summer injection season from a much lower storage level than in recent years, at a time when global energy markets and supply are under pressure," said Piotr Kus, general director of Entsog said on publication of the group's summer supply outlook.
Gas stock levels in the European Union stood at just 28 per cent on April 1, which is the start of the summer season in the gas market, equating to around 29 billion cubic metres and lower than the three previous years, Entsog's report showed.
Europe will require record LNG imports of around 86 bcm between April 1 and September 30, combined with increased utilisation of gas infrastructure, in order to reach a 90 per cent storage level ahead of next winter while also meeting EU gas demand and exports, it added.
LNG demand could also rise by another six bcm in case of disruptions to pipeline imports from Russia.
"It is critical to start injecting gas as early as possible, even as early as April, and continue filling until November, to ensure adequate levels for the winter ahead," Kus said.
The gas network is sufficient to allow market participants to reach the 90 per cent stock level in all underground gas storage facilities under a reference scenario, but could reach 76 per cent only under a scenario where LNG availability would drop to 71 bcm, the report found.
(Reporting by Nora Buli; editing by Nina Chestney)
