Europe is entering winter with historically low gas reserves and cannot withstand further supply shocks, the head of the International Energy Agency has warned, as the US-Israel war on Iran disrupts global supply chains and pushes energy prices higher across the world.
Speaking to Al Jazeera on the sidelines of a conference in Berlin on Wednesday, Fatih Birol said all regions were being hit by energy disruptions in the Strait of Hormuz, but Europe was particularly vulnerable and would likely face rising costs of liquefied natural gas in the coming months, even if peace returns to the Gulf today.
"The best day for a ceasefire would have been yesterday," Birol said. "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."
European Union natural gas storage is 72 percent full, down from the usual 90 percent, a shortfall analysts say is equivalent to the energy needed to power 10 to 12 million homes. Nearly a tenth of the continent's LNG transited through the Strait of Hormuz before the war, and Iran's attacks on vessels have sharply reduced imports.
EU energy ministers are considering asking households and businesses to ration consumption, according to news reports. Birol said a diesel shortage also looms, with about a third of Russian deliveries stopped and Ukraine's attacks on Russian refineries reducing supply.
Gas prices have surged 140 percent since February and Brent crude is trading above $100. Birol noted that oil prices dropped by $20 when the Group of Seven agreed this month to release emergency stocks, but prices are rising again.
Birol expressed disappointment that governments had not prepared earlier. "I am really disappointed that governments didn't take the necessary measures," he said. Warning that the dark shadow of geopolitics over energy was unprecedented, he added: "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 remaining. "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," Birol concluded.
Analysis
Why This Matters
- Europe's gas storage is at 72 percent capacity, well below the usual 90 percent, a shortfall equivalent to the energy needed to power 10 to 12 million homes through winter.
- Gas prices have already surged 140 percent since February and Brent crude is above $100, with further rises likely if the winter is harsh.
- EU energy ministers are weighing asking households and businesses to ration consumption, a move that would affect daily life across the bloc.
Background
Europe has long relied on imported gas to generate electricity and heat homes, and depended heavily on deliveries from Russia. After Russia's invasion of Ukraine in 2022, Moscow cut gas supplies in retaliation for sanctions, and the EU now plans to phase out Russian gas permanently. The current crisis is different in origin but similar in effect: nearly a tenth of Europe's LNG passed through the Strait of Hormuz before the war, and with Iran attacking vessels, imports have plummeted. Birol said his agency had long warned about this over-reliance and about Europe's early turn away from nuclear power, and that Middle East countries are now hurriedly building pipelines that bypass the strait, efforts he argued should have come much earlier.
Key Perspectives
[IEA and Fatih Birol]: Argue that Europe is more vulnerable than any other region, that costs will rise even if a ceasefire comes immediately, and that governments failed to take necessary measures in time. Birol also warns that the increasingly political nature of energy adds to uncertainty, making the sector harder to manage.
[European governments]: Confronted with low storage and disrupted imports, EU energy ministers are discussing whether to ask households and businesses to ration consumption. Some members, including France, have again stepped up orders of Russian gas amid the Gulf crisis, despite the long-term plan to phase it out.
[Industry experts]: Some estimate that emergency reserves reaching the market will only cover a few months, limiting their value as a buffer against continued shocks. Birol counters that his agency recorded real impact, citing a $20 drop in oil prices immediately after the G7 release agreement.
What to Watch
- Whether the Strait of Hormuz and the Bab al-Mandeb strait reopen to shipping, which Birol says is essential to stabilise prices, and whether his third coordinated release of emergency stocks becomes a fourth.
- The EU's decision on gas rationing and the level of storage as the bloc enters the peak of winter.
- Winter weather conditions: a harsh winter would push prices and demand higher, while a milder season could ease the pressure on households and industry.