European Gas Prices Reach Highest Level Since Late 2022 in August

MOSCOW, September 1. /TASS/. The average monthly gas price in Europe reached its highest level since late 2022 in August, at $744 per 1,000 cubic meters, amid record-low gas inventories ahead of the coming winter and the ongoing conflict in the Middle East, according to futures data from London's ICE exchange and TASS calculations.

European gas prices nearly doubled in August compared with the same month a year earlier and were also 17% above the July average.

While gas futures traded at around $709 per 1,000 cubic meters on July 31, trading closed at about $840 on August 31, up 18.5% from the end of the previous month.

The price of gas at European hubs averaged $481 per 1,000 cubic meters in the first quarter of this year and $550 in the second quarter, while the third-quarter average currently stands at $691.

In January 2025, the average gas price in Europe was around $517 per 1,000 cubic meters (up 53% year-on-year from 2024), followed by $542 in February (+88%), $467 in March (+55%), $409 in April (+28%), $412 in May (+15%), $439 in June (+14%), $410 in July (+12%), $394 in August (-10%), $393 in September (-5.5%), $384 in October (-16%), $368 in November (-25%), $334 in December (-32%), $415 in January 2026 (-20% year-on-year from 2025), $396 in February (-27%), $632 in March (+35%), $544 in April (+33%), $570 in May (+39%), $534 in June (+22%), $638 in July (+55%), and $744 in August (+89%).

Reasons behind gas price increase

The rise in gas prices in the second half of the summer was primarily driven by a new phase of the Middle East conflict and the closure of the Strait of Hormuz, through which one-fifth of global supplies pass. This pushed up gas prices in Europe and Asia, which compete for available supplies on the market, driving prices higher.

The latest escalation in the US-Iran conflict began on July 8. For the first time since Washington and Tehran signed a memorandum, the US Armed Forces carried out several waves of strikes on the Islamic Republic, purportedly in response to an attack on a merchant vessel in the Strait of Hormuz. On the same day, US President Donald Trump announced the end of the ceasefire with Iran. In response, Tehran began striking US facilities in the Middle East located in Bahrain, Jordan, Qatar, Kuwait, the UAE and Oman.

Meanwhile, Europe is continuing to inject gas into storage facilities ahead of winter. As TASS previously reported, Europe risks entering the heating season with record-low gas inventories. The average rate of replenishment at underground gas storage facilities in EU countries in July was among the lowest recorded since data collection began in 2011, accelerating only slightly in August. At these rates, Europe's storage facilities may be only 70-75% full by the start of the fall-winter period, which would be the lowest level ever recorded at the beginning of a heating season.

The Guardian, citing experts, reported that Europe's gas market is experiencing a bout of panic over hydrocarbon inventories in storage facilities falling to their lowest level in 13 years. According to their estimates, gas inventories in European storage facilities are set to reach a 13-year low ahead of colder weather, raising the risk of "winter panic" among traders.

Under European Commission requirements, EU countries must ensure that their gas storage facilities are 90% full between October 1 and December 1 each year. A 10% flexibility margin is allowed in the event of difficult storage-filling conditions. As a result, net injections into European storage facilities ahead of the 2026-2027 fall-winter period must total at least 68 bln cubic meters to meet the storage target. So far, Europe has injected only 59% of the volumes needed for the coming winter.

Storage-filling rates this year have been significantly affected by Europe's lost "battle" with Asia for available LNG supplies during the Middle East conflict, higher fuel prices, and extreme heat in June and July. During such hot summer periods, demand for electricity to power cooling and air-conditioning systems rises sharply. Gas is one of the main sources of electricity generation, alongside nuclear, wind and solar power.