Europe is heading into what could be its most difficult winter gas season since 2022, as wholesale prices hover near multi-year highs and storage levels remain unusually low. The benchmark Dutch TTF contract traded above €66 per megawatt-hour on Tuesday, down from an intraday peak of €68, but still more than double its level at the start of the year.
The rally is driven by investor fears that the Strait of Hormuz could remain closed into the winter, disrupting a route that normally carries nearly one-fifth of global LNG trade. That uncertainty coincides with EU gas storage at just 63% full as of late August, far below the five-year average of 79%, according to Gas Infrastructure Europe.
“Europe's gas stores are unusually low for the time of year,” said Natasha Fielding, editorial manager for gas, LNG, coal and biomass at Argus Media. “The only other time in the last 15 years that stocks were close to as low was in 2021, ahead of the last major gas crisis.”
Among the larger European markets, Germany’s storage is only 51% full, while the Netherlands stands at 44.3%. These figures underscore the fragility of the continent’s energy system as the heating season approaches.
Lower consumption, but higher risk
Oxford Economics notes that EU gas consumption is now 15–20% lower than in 2021, which means the bloc can operate with lower storage levels. However, that would require heavier reliance on winter LNG imports, leaving Europe more exposed to competition with Asian buyers for available cargoes. That competition is already intensifying due to the effective closure of the Strait of Hormuz.
Goldman Sachs analysts warn that at current price levels, Europe may not have enough gas to manage through the winter. In a scenario where Middle East energy exports normalise only gradually through 2027, they estimate that December 2026 TTF would need to rise above €100/MWh—more than double their base case of €50/MWh.
Oxford Economics suggests the EU might be forced to suspend parts of its ban on Russian gas imports if supplies tighten further. Russia’s share of combined pipeline and LNG imports was around 12.5% in 2025, and a new EU regulation prohibits all Russian gas imports from 18 March 2026, with full phase-out by the end of 2027.
How quickly will household bills rise?
A brief price spike may have limited effect, but a prolonged rally would gradually feed into new and renewed household contracts. The headline TTF price can rise much faster than the EU’s effective import price, which reflects what importers actually pay after existing contracts and hedging arrangements. However, as contracts expire and suppliers buy or hedge at higher market prices, the effective import price moves closer to the wholesale level.
According to Fielding, the extent to which energy bills rise depends on how long the rally lasts and whether prices climb further. “Households on variable gas tariffs would be among the first to feel the effects of higher wholesale prices,” she said, adding that the pass-through from gas to electricity bills is typically weaker. “Countries with more liberalised retail markets tend to experience a more rapid pass-through.”
Oxford Economics estimates that, on average, it takes about six months for wholesale price changes to fully reflect in consumer prices. But the timing varies widely. “The prevailing market structure—with 12- or even 24-month fixed-price contracts dominating—means that it takes nearly a year for peak pass-through in markets such as Germany and Austria,” the report said.
In contrast, consumer gas prices may respond within a few months in France, Italy and Spain, while in the Netherlands the pass-through is almost immediate. Italy is named as the most exposed large European economy due to a relatively fast pass-through and a considerably above-average reliance on gas, though it currently has one of the highest storage levels.
Much depends on how cold the winter is. “The backbone of the EU’s space heating remains gas; hence, the EU’s gas prices remain hostage to outside temperatures in the coming winter,” Oxford Economics said. A sustained cold spell would push up demand for heating and gas, potentially driving prices higher.
In their report predating the latest price spike, Oxford Economics projected that eurozone consumer energy prices could be as much as 15% higher year-on-year in the fourth quarter. That would add pressure on households already grappling with elevated living costs across the continent.
For now, the EU’s energy security hinges on a combination of storage levels, LNG imports, and the weather. As the gas price surge continues, the first to feel the pinch will likely be consumers in the Netherlands, followed by those in more liberalised markets. Germany and Austria, with their longer contract cycles, may have a few more months of reprieve—but the bill will eventually arrive.
