Wood Mackenzie's latest analysis warns that historically low European gas storage levels, compounded by renewed disruption in the Strait of Hormuz — through which roughly a fifth of global LNG supply transits — have driven spot prices more than 50% above their June lows and placed winter 2026/27 supply security at risk.

Three pressures are converging simultaneously. Storage across Europe stands at just above 50%, a historically low level for late July and well below the trajectory needed to meet the EU's regulatory target of 90% full by 1 November. Asian LNG demand has returned to 2025 levels despite the shortfall in Qatari volumes — Qatar being one of the world's three largest LNG exporters — sharpening competition with Europe for available cargoes. Meanwhile, limited new LNG supply growth is expected over the next 12 months, as Qatari developments are not anticipated to return to full capacity before the second half of 2027.

Under a hypothetical best-case scenario — assuming Qatar reaches full operational capacity by the end of September, excluding damaged trains — Wood Mackenzie's analysis suggests European storage would reach 75% at best by 1 November. The five-year average for that date is 90%. Should the Strait remain closed for a further two months, storage would fall below 70%, prices would rise further, and some emerging Asian economies already strained by high LNG costs would face demand destruction.

"Low European inventories, strong Asian demand and limited new LNG supply growth almost guarantee elevated prices through this winter and into 2027," said Massimo Di Odoardo, Vice President, Gas and LNG Research at Wood Mackenzie.

Key findings from the analysis include:

• Europe faces a structural storage deficit heading into winter 2026/27. Storage at just above 54% is historically low for late July. Even under the best-case scenario, Europe enters the heating season at 75% capacity against a 90% five-year average.
• Spot prices are up more than 50% since 12 June and are trading above €60/MWh (US$20/mmbtu). Gas is proving more sensitive than oil to the disruption.
• The supply gap will not close quickly. No significant new LNG supply is expected over the next 9 to 12 months, with new Qatari capacity not online before the second half of 2027.
• Some emerging Asian economies face demand destruction, not just price pressure. Wealthier nations can absorb the cost; lower-income markets cannot.
• The LNG market might only rebalance from 2028. Sustained disruption or new geopolitical risks could reduce both the duration and depth of the anticipated global LNG oversupply.

Implications for Europe

The current situation is not analogous to 2022. Prices have not returned to the records set after Russia's invasion of Ukraine removed major pipeline supply, and sustained investment in European renewables capacity since then has reduced power market exposure. However, Europe is approaching energy crisis territory. Near-term alternatives to gas are limited, and the EU faces a difficult calculation: pressing ahead with both a proposed ban on all Russian LNG imports from January 2027 and more stringent methane emission regulations could constrain import flexibility at precisely the moment Europe needs it most. With roughly two months remaining in the traditional injection season, the window to close the storage gap before heating demand peaks is narrowing.

The global gas industry is set to convene at Gastech 2026 in Bangkok in September, where supply resilience is expected to define the agenda.

Source: Wood Mackenzie