Europe is heading into winter with natural gas reserves significantly below historical levels, raising fears of higher energy prices and possible supply shortages as the United States-Israel war on Iran continues to disrupt global energy supplies.
Fatih Birol, head of the International Energy Agency (IEA), warned that Europe was particularly vulnerable to further supply shocks, noting that even an immediate ceasefire in the Gulf would not prevent energy costs from rising in the coming months.
Speaking with newsmen on the sidelines of an international conference in Berlin on Wednesday, Birol said the continent’s dwindling gas reserves, combined with competition from Asian countries for liquefied natural gas (LNG), could worsen the situation, particularly if Europe experiences a severe winter.
“The best day for a ceasefire would have been yesterday,” he said, expressing concern over the growing impact of geopolitical tensions on global energy markets.
According to the IEA chief, European countries traditionally build up substantial gas reserves ahead of winter to meet household heating needs and sustain industrial activities. However, current storage levels are considerably below historical averages, leaving the continent exposed to potential supply disruptions.
“I think if we have a harsh winter, we may see higher prices of natural gas in Europe,” Birol said, warning that the uncertainty surrounding global energy supplies could make conditions difficult for the continent this year and next.
The European Union’s natural gas storage facilities are reportedly about 72 per cent full, compared with the usual level of approximately 90 per cent at this stage of the year. Analysts estimate that the shortfall represents energy equivalent to the needs of between 10 million and 12 million homes.
The situation has been compounded by disruptions to shipping through the Strait of Hormuz, a critical global energy transit route, following Iranian attacks on vessels amid the conflict. Before the war, nearly a tenth of Europe’s LNG supplies passed through the strait.
European energy ministers are reportedly considering measures to encourage households and businesses to reduce consumption if supply constraints worsen.
Birol said the current crisis had exposed the consequences of governments failing to prepare adequately for disruptions along major energy routes, despite longstanding concerns about the strategic importance of the Strait of Hormuz.
He recalled that one of the questions he routinely asked prospective employees of the IEA was how they would respond if the strait were suddenly closed.
The IEA chief also pointed to instability around the Bab el-Mandeb Strait as another factor worsening disruptions to global energy transportation.
Expressing disappointment with the lack of preparedness among governments, Birol said several Middle Eastern countries were now rushing to construct or expand pipelines capable of transporting oil and gas without passing through the Strait of Hormuz.
In his view, such investments should have been undertaken long before the current crisis.
Europe’s Energy Dependence Under Scrutiny
Beyond natural gas, Europe is also facing concerns over supplies of refined petroleum products, particularly diesel, which is essential to its transportation, agricultural and industrial sectors.
Birol attributed part of the looming diesel shortage to Ukrainian attacks on Russian refineries, which he said had disrupted about a third of Russian deliveries.
The crisis has renewed questions about Europe’s historical dependence on imported energy, particularly Russian gas, and its decisions concerning alternative sources of electricity.
For years, the IEA warned European governments against excessive reliance on Russian energy supplies and argued that maintaining nuclear power capacity would strengthen domestic energy security.
Those concerns became more pronounced after Russia’s invasion of Ukraine in 2022, when Moscow reduced gas supplies in retaliation for Western sanctions, intensifying Europe’s energy crisis.
Although the European Union plans to phase out Russian gas permanently, the latest disruption in the Gulf has prompted some member states, including France, to increase orders for Russian supplies.
Birol has also played a central role in coordinating emergency energy responses, including the release of strategic reserves by the Group of Seven (G7) countries following Russia’s invasion of Ukraine.
In March, the G7 agreed to release emergency stocks of crude oil and refined products to help stabilise global markets, with the IEA coordinating the effort.
However, industry experts have questioned how long such interventions can cushion the impact of prolonged supply disruptions, warning that emergency reserves provide only temporary relief.
Birol maintained that the releases had produced tangible results, pointing to a sharp fall in oil prices immediately after the G7 announced an emergency stock release earlier this month.
Nevertheless, the relief has proved temporary, with energy prices rising again as the conflict continues.
Gas prices have reportedly surged by 140 per cent since February, while Brent crude has climbed well above $100 per barrel, increasing the risk of higher transportation costs, industrial expenses and household energy bills.
Geopolitical Tensions Threaten Long-Term Stability
Birol warned that the consequences of the war would extend well beyond the immediate disruption, arguing that the conflict had fundamentally altered the movement of energy supplies across the world.
He also linked the energy crisis to growing political tensions within Europe, where rising living costs and concerns over energy security are fuelling public dissatisfaction with mainstream governments.
According to him, populist political parties in countries including France and Germany are increasingly capitalising on public anger by portraying incumbent administrations as incapable of managing the crisis.
“I have never ever seen the dark and long shadow of geopolitics so dominant in the energy sector,” Birol said.
He added that energy was increasingly being treated as a tool of political influence rather than primarily as a commercial commodity, a development he described as deeply worrying.
Despite the mounting challenges, Birol said the European Union still had about 80 per cent of its emergency stocks remaining, expressing hope that further releases would not become necessary.
He, however, warned that global energy markets had limited capacity to absorb additional disruptions, particularly if shipping through the Strait of Hormuz and Bab el-Mandeb remained constrained.
“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 said.
