Gas is flying, Europe on alert - Prices reach highest levels since 2023. IEA calls for strategic reserves
Natural gas prices in Europe have hit their highest level since the beginning of 2023, exceeding 79 euros per megawatt-hour. The increase comes at a time when the escalation of the conflict between the US and Iran has added to concerns about supplies of liquefied natural gas, or LNG.
The Strait of Hormuz, through which about 20% of global LNG trade passed before the conflict, has been virtually closed for several months. This has limited supplies from the Middle East and increased uncertainty in the European market.
The reference price for gas on the Dutch TTF exchange has risen sharply this year, from around 26.5 euros at the start of the year to over 79 euros per megawatt-hour. Experts warn that if supplies from the Middle East are slow to return, the price could even exceed 100 euros in December.
The situation is further complicated by the low levels of European reserves. However, this does not mean that Europe is facing an immediate gas shortage. Gas consumption in the European Union remains around 15 to 20% lower than in 2021, allowing it to operate with lower reserves.
But dependence on LNG has grown sharply after Russian gas supplies via pipelines were cut. Europe has increased its LNG import capacity, but the terminals themselves do not guarantee supply. The continent must secure and pay for cargoes in an increasingly competitive global market.
In this situation, the International Energy Agency, IEA, has called on governments to change the way they prepare for energy crises. The agency proposes the creation and expansion of strategic gas reserves, which would be used only in emergencies.
Currently, Italy, Poland and Spain have such reserves. In 2025, about 12 billion cubic meters of gas were held as strategic reserves in the European Union, equivalent to about 3.5% of annual consumption.
The IEA also calls for more cooperation between countries, more flexible contracts and joint purchases of LNG, so that supplies can be directed more quickly to countries facing shortages.
The agency also suggests using storage capacities in Ukraine after the war ends, if security conditions allow. According to it, Europe could store between 10 and 15 billion cubic meters of gas there.
Rising energy prices are also putting pressure on European inflation. Eurozone inflation reached 3.3% in August, while high energy costs are adding to concerns about higher interest rates and higher financing costs for governments.
The IEA's message is that emergency reserves have a cost, but a lack of preparation could be much more expensive in the event of another supply crisis.
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