European households and industries are expected to face at least another year of high natural gas prices, even if the war in Iran ends and the coming winter is mild. Historically low gas storage levels and the need to replenish reserves throughout 2027 are likely to keep prices elevated, Reuters reports.
European benchmark gas prices have risen by more than 150% this year as disruptions to shipping through the Strait of Hormuz have blocked nearly 20% of global liquefied natural gas (LNG) exports from Qatar and the United Arab Emirates. Most of these supplies are destined for Asian markets.
Although the United States, Canada and Nigeria have increased exports, the loss of LNG supplies from the Middle East has intensified competition for available cargoes, complicating Europe’s efforts to replenish its reserves during the summer.
Analysts expect European gas storage facilities to be around 75–78% full by November 1, approximately 10 percentage points below the five-year average.
Even with a winter of normal temperatures, storage levels in northwestern Europe could fall to around 20% by early April. If the Strait of Hormuz remains blocked, pressure to replenish reserves in 2027 could intensify further.
“This is not just the coming winter that will be difficult from a supply perspective; we risk seeing the situation continue into next summer as well,” said Yuriy Onyshkiv, an analyst at LSEG.
Further Price Increases Remain Possible
Europe is not currently facing an immediate shortage of gas, but its reserves may be insufficient to withstand potential supply disruptions, according to Moutaz Altaghlibi, an energy economist at ABN Amro.
EU gas storage typically covers 25–30% of winter consumption, with the remainder supplied mainly through pipelines and LNG imports, particularly from Norway and the United States.
In the event of a cold winter, storage levels could fall to 10–15%, making it significantly more difficult to replenish reserves over the following year.
Analysts do not expect prices to return to the extreme levels recorded during the 2022 energy crisis, when they exceeded €350 per megawatt-hour. However, prices rising above €100/MWh—around 25% above current levels—remain a possibility.
Consumers Could Feel the Impact in 2027
The effects of higher wholesale gas prices are expected to reach consumers more fully in 2027, as existing supply contracts are renewed.
In Germany, gas tariffs for new customers have increased by 55% this year, rising from €0.08 to €0.124 per kilowatt-hour. According to comparison platform Verivox, existing customers could face increases of 10–20% when their contracts expire.
In the United Kingdom, the household energy price cap, which reached a three-year high in October, could rise by a further 16% in January, according to Cornwall Insight.
High energy costs are also undermining the competitiveness of European industry. Even before the latest crisis, gas prices in the European Union were around three times higher than in the United States.
Market Normalization May Take Until 2028
Analysts warn that even an end to the conflict with Iran would not immediately bring prices down, as Europe would still need substantial gas supplies to rebuild its reserves.
The situation could become more difficult following the European Union’s planned complete ban on Russian LNG imports from January 2027.
Rabobank forecasts an average gas price of around €45/MWh in 2027, approximately €20 higher than its previous projection.
A milder winter and increased wind power generation could ease pressure on the market. However, BNP Paribas analyst Jason Ying does not expect European gas prices to return to pre-conflict levels before 2028.
