Europe Entering Winter with Lowest Gas Reserves on Record, IEA Chief Warns

The head of the International Energy Agency, Fatih Birol, has issued a stark warning about Europe's energy security on the eve of winter. Europe is entering winter with historically low gas reserves and cannot withstand further supply shocks, he said, as the US-Israel war on Iran disrupts global supply chains.

Speaking on the sidelines of an international conference in Berlin on Wednesday, Birol said all regions are being hit by energy disruptions in the Strait of Hormuz, but 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,’ said the energy economist, whose agency advises wealthy member nations and coordinates emergency responses.

‘Normally before the winter, European countries have a lot of gas stocks, but the gas stocks we have while we are entering this winter are much lower than historical averages,’ he said, adding that Europe's gas is competing with that of Asian countries, which are even more dependent on the Middle East.

‘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 the uncertainty. ‘Life will not be easy for Europe this year and also next year.’

European nations have long relied on imported gas to generate electricity for industries and warm homes in the freezing winter. Nearly a tenth of the continent's LNG transited through the Strait of Hormuz before the war. However, Iran's attacks on vessels have caused imports to plummet.

As the winter chill settles in, 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, analysts say.

EU energy ministers are now mulling over whether they should ask households and businesses to ration consumption, according to news reports. Any such decision would need to come before winter bites in full, or pressure on reserves will grow further.

Birol said he had long thought about the dangers of relying on the Strait of Hormuz. In fact, his standard question to recruits seeking to join his agency was often: what would they do if the strait shut down today? That fear has now materialised. Flare-ups in the alternative Bab al-Mandeb strait, he added, have only worsened things.

Expressing disappointment at governments' preparedness, the Turkish-born energy expert said: ‘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.’

Alongside gas, Europe also faces a shortage of refined products. The EU's ageing refineries have processed less crude in recent years, leaving the bloc short of imported refined products such as the diesel that powers its trucking, agricultural and industrial sectors. Birol said Ukraine's attacks on Russian refineries were also behind a looming diesel scarcity, with about a third of Russian deliveries having stopped.

When the Group of Seven nations agreed in March to release 400 million barrels of crude and diesel from their strategic reserves, it was Birol who coordinated how those emergency stocks reached global markets — the third time he has overseen emergency stock releases since Russia's invasion of Ukraine in 2022. He argued the releases had real impact, pointing to a $20 drop in soaring oil prices immediately after the G7 countries agreed to release emergency stocks earlier this month.

Prices are, however, rising again. Gas has surged by 140 percent since February, and Brent crude is trading well above $100. Whatever happens now, Birol pointed out, the war will be felt for months, and it has irrevocably altered how energy travels around the world.

The crisis is also altering Europe's politics, Birol noted. Russia has wielded gas as a weapon, and populist parties, from France to Germany, are capturing growing public anger to frame mainstream governments as incompetent. ‘I have never ever seen the dark and long shadow of geopolitics so dominant in the energy sector,’ he said. ‘Energy is not currently considered a business but a political leverage. As an energy man, this worries me.’

The EU still has about 80 percent of its emergency stocks, and Birol hopes he will not have to oversee a fourth release. But the world's supply cannot take more shocks, he warned. ‘I really hope that both of the straits will be unconditionally opened sometime soon; otherwise, in the energy world, we don't have much more buffer zones to still keep the prices at a certain level as we have today,’ he concluded.