Europe Faces Winter Gas Shortage Without Iran Deal: IEA

Europe risks a gas shortage this winter unless President Donald Trump secures a deal with Iran to reopen the Strait of Hormuz, the International Energy Agency warned on Tuesday.

Storage could end up just 10% full if the shipping route remains closed into early next year and Europe experiences a cold winter.

The combination would threaten supplies during late-season cold spells and prolong pressure on prices.

Storage Under Strain

The danger begins before reserves are exhausted. Below 30% of working capacity, storage facilities lose some of their ability to deliver gas quickly to households and industrial users.

“This would leave the European market exposed to late cold spells,” the IEA said in its quarterly gas report.

Germany’s storage facilities are below two-thirds full, falling short of the country’s legal requirement for an 80% fill level before winter.

Deeper withdrawals would also increase the volume Europe needs to buy next summer.

Starting the refill season with depleted reserves would keep gas prices elevated beyond the immediate winter squeeze, according to The Telegraph.

Diplomacy Moves Prices

The warning puts Europe’s energy exposure at the center of Trump’s next steps on Iran.

He has pledged to end Tehran’s Hormuz blockade after Tuesday’s U.S. congressional midterm elections.

Reports last month raised the possibility of renewed U.S. bombing as early as Wednesday.

However, Axios reported on Monday that Trump had told Israeli Prime Minister Benjamin Netanyahu he wanted to allow more time for diplomacy.

Iranian media separately reported that Supreme Leader Mojtaba Khamenei had approved peace talks with Washington after Iranian officials held weekend discussions with Qatari mediators.

Those reports sent European gas prices down more than 10%, to slightly above €93 per megawatt-hour.

Prices nevertheless remain sharply elevated: the IEA said European spot gas in the third quarter cost 90% more than a year earlier.

U.S. Exports Leave a Gap

Qatari gas shipments have been trapped by the Hormuz closure since March.

Unlike Saudi Arabia and the United Arab Emirates, which have diverted crude exports through alternative routes, Qatar cannot similarly reroute its gas.

Higher U.S. exports have only partly compensated for the missing Qatari volumes.

Buyers in South Korea and Japan also frequently offer more than European customers for American supplies.

“The overall weak EU storage position leaves the Continent more exposed than usual to market and weather shocks,” the IEA said.

Patrick Pouyanné, chief executive of TotalEnergies, offered a different assessment on Monday, arguing that Europe would secure enough gas but at substantially higher prices.

He said markets had priced in an end to the war over the summer but failed to anticipate a faster rise in gas costs.

“We will pay more than others; it’s simple.”