European gas prices face temporary pressure as winter supply outlook stays supported

Traders Union
All News
Commodities
European gas prices winter outlook

Highlights

European TTF gas prices hit yearly highs as EU storage drops below 75 per cent versus 98 per cent in 2023, increasing winter spot risk.
Iran-related supply disruptions cut Qatari and UAE LNG flows, but these covered only 3 per cent of 2025 supply, with three-quarters already replaced by other producers.
Higher gas prices push eurozone inflation to 3.8 per cent in September and could lift UK rates above 4 per cent in January, though falling futures indicate easing pressure.

Winter pricing pressure and supply disruption

As reported by the Financial Times, the latest jump in European gas prices reflects concern over low storage and reduced LNG flows through the Strait of Hormuz rather than a collapse in the overall gas system.

The benchmark TTF contract has reached its highest level of the year, while UK gas prices have moved in a similar pattern. The rise is significant for households, manufacturers and service businesses, and it is already feeding into inflation expectations in the eurozone and the UK as winter approaches.

Storage across the EU is at less than 75 per cent, compared with 98 per cent in 2023 and an average of 90 per cent in mid-October between 2011 and 2025. That leaves the region more exposed to a cold spell, because lower stockpiles force buyers to rely more heavily on prompt supply and winter spot pricing.

Still, the article argues that the market reaction looks larger than the underlying supply loss. Iran’s disruption has reduced gas outflows from Qatar and the United Arab Emirates, but their LNG exports represented only 3 per cent of total natural gas supply in 2025, and the International Energy Agency says other producers replaced three-quarters of the lost volumes between March and June.

Demand adjustment and inflation implications

European demand is also unlikely to remain unchanged at current price levels. The analysis says gas consumption has shown some inelasticity since the Covid-19 period, but not enough to justify a sustained tripling in wholesale prices when global LNG supply is only modestly lower.

Consumption also does not rebound when prices fall, reflecting efficiency gains, wider use of heat pumps, more renewable power generation and some loss of industrial capacity. On that basis, storage measured against today’s lower consumption may indicate more resilience than headline inventory percentages suggest.

The inflation impact is immediate, with higher energy bills already lifting eurozone inflation to 3.8 per cent in September and likely to push the UK headline rate above 4 per cent in January. But the electricity effect may be weaker than in 2022 because French nuclear outages are not the same constraint in 2026 and power markets are less dependent on gas-fired generation.

Gas futures remain downward sloping, pointing to expectations of easing prices. Rising LNG exports from the U.S., Canada and Mexico are expected to more than offset lower Gulf supply, suggesting gas is unlikely to remain a major driver of European inflation for long.

In our earlier article on Mario Draghi’s warning about the inflation-and-debt trade-off, we explained his case that central banks should keep inflation under control without driving rates higher than necessary and choking off productive investment. He also argued that Europe needs stronger market integration and targeted industrial-policy support, including funding for AI, to build resilience to repeated supply shocks that can keep inflation risks elevated.

This material may contain third-party opinions, none of the data and information on this webpage constitutes investment advice according to our Disclaimer. While we adhere to strict Editorial Integrity, this post may contain references to products from our partners.