EU entering winter with lowest gas reserves on record, IEA boss warns
Europe is entering winter with historically low gas reserves and cannot withstand further supply shocks, according to Fatih Birol, head of the International Energy Agency.
Berlin, Germany – Europe is entering winter with historically low gas reserves and cannot withstand further supply shocks, Fatih Birol, head of the International Energy Agency, has warned, as the US-Israel war on Iran disrupts global supply chains.
Speaking to Al Jazeera on the sidelines of an international conference in Berlin, Birol said all regions are being hit by energy disruptions in the Strait of Hormuz but that Europe is particularly vulnerable and will likely face rising costs of liquefied natural gas (LNG) in the coming months – even if peace returns to the Gulf today.
The best day for a ceasefire would have been yesterday
Birol explained that European countries typically have substantial gas stocks before winter, but current levels are much lower than historical averages. Europe's gas is now competing with Asian countries, which are even more dependent on Middle Eastern energy supplies.
I think if we have a harsh winter, we may see higher prices of natural gas in Europe, Birol said, adding that the increasingly political nature of energy adds to uncertainty. Life will not be easy for Europe this year and also next year.
Record Low Reserves
European nations have long relied on imported gas to generate electricity for industries and warm homes in winter. Nearly a tenth of the continent's LNG transited through the Hormuz Strait before the conflict, but Iran's attacks on vessels have plummeted imports.
As winter approaches, the European Union's natural gas storage is only 72 percent full, down from the usual 90 percent. The shortfall is equivalent to the energy needed to power 10 to 12 million homes, according to analysts.
EU energy ministers are now considering whether to ask households and businesses to ration consumption, according to news reports. Birol had long warned about the dangers of relying on the Strait of Hormuz, even making it a standard question for recruits joining his agency.
Political Fallout
The EU's ageing refineries have processed less crude in recent years, exacerbating shortages of imported refined products like diesel that power the bloc's trucking, agricultural and industrial sectors. Birol noted that Ukraine's attacks on Russian refineries have also contributed to a looming diesel scarcity, with about a third of Russian deliveries stopped.
When the Group of Seven nations agreed to release 400 million barrels of crude and diesel from strategic reserves in March, Birol coordinated how those emergency stocks reached global markets – the third time he has overseen such releases since Russia's invasion of Ukraine in 2022.
I am really disappointed that governments didn't take the necessary measures. Now, everybody is in a hurry, taking measures; the Middle East countries are building new pipelines, expanding the new pipelines that are bypassing the Strait of Hormuz … but in my view, these efforts should have been done much earlier.
Birol argued that his agency has recorded real impact from emergency releases, pointing to a $20 drop in oil prices immediately after the G7 agreed to release 100 billion barrels earlier this month. However, prices are rising again, with gas surging 140 percent since February and Brent crude trading above $100.
The war has irrevocably altered how energy will travel around the world, Birol noted, adding that it's also changing Europe's politics. Russia has wielded gas as a weapon, while populist parties from France to Germany are capturing growing public anger to frame mainstream governments as incompetent.
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