European gas benchmark climbs above €79 as governments reassess emergency reserves

Gas prices reach a three-year high

Europe’s benchmark front-month natural-gas contract traded above €79 per megawatt-hour on September 9, its highest level since early 2023. The increase reflects prolonged disruption to liquefied-natural-gas shipments from the Gulf and renewed fighting involving the United States and Iran, rather than an immediate physical shortage inside the European Union.

The Strait of Hormuz carried roughly one-fifth of global LNG trade before the conflict. Its effective closure has removed a major supply route for months. Damage at Qatar’s Ras Laffan complex has compounded the squeeze: two production units lost in March represented about 17 billion cubic metres of annual capacity, and repairs are expected to take several years.

Storage economics are becoming more difficult

High near-term prices have weakened the normal commercial incentive to refill storage. Traders usually buy cheaper summer gas and sell it during the winter, but the current curve anticipates some improvement later in the year. That inversion makes injections less attractive even as inventories remain lower than usual, increasing Europe’s dependence on imported LNG during cold weather.

The European Commission nevertheless said after a September 3 meeting with member states that there was no immediate security-of-supply risk. It cited lower gas demand, expanded LNG import infrastructure and diversified suppliers. EU consumption remains substantially below its 2021 level, helping the system operate with smaller stocks, although that buffer would be tested by a severe winter or further supply losses.

Strategic reserves return to the debate

The International Energy Agency has recommended that governments examine strategic gas reserves held outside the normal commercial market and released only during emergencies. Italy, Poland and Spain already use versions of this model. Euronews reported that strategic reserves across the EU totalled an estimated 12 billion cubic metres in 2025, equal to about 3.5% of annual consumption.

Other options include more flexible supply contracts, coordinated purchasing, swaps and agreements to store emergency gas in another country. The IEA also proposed studying postwar use of Ukrainian storage capacity. Each model creates difficult questions about ownership, release conditions and who bears the cost, but could reduce competition among European buyers during a sudden shortage.

What to watch before winter

The Commission will reconvene its Gas Coordination Group on September 24. Officials will track storage trajectories, Qatari repairs, Hormuz traffic and autumn demand. The central tension is that Europe may be physically prepared yet still face damaging prices. Prolonged wholesale costs near current levels would feed into household bills, industrial competitiveness and inflation even if pipelines and storage facilities continue meeting demand.