A combination of Middle East conflicts and the post-2022 gas shift has left European gas and diesel reserves alarmingly thin. The coming months will test supply resilience.

Europe is preparing for winter with extremely tight energy fuel stocks, as conflicts in the Middle East and between Russia and Ukraine intensify global markets for liquefied natural gas and heating fuel, driving inventories to critically low levels.

Natural gas and diesel remain the main heating sources in many European countries: gas accounts for about 30% of home heating needs, diesel for about 10%. After several years of energy upheaval, the continent is entering winter again with high supply pressure.

The vulnerability of the gas sector is largely due to the radical restructuring of the energy system after Russia’s full-scale invasion of Ukraine in 2022. Europe quickly replaced Russian gas delivered through pipelines with LNG imports, becoming one of the world’s largest importers of this energy weapon.

This transition has boosted energy security by reducing dependence on long supply routes, but at the same time it changed the dynamics: Europe now competes with Asia and other regions on the global LNG market, where supply disruptions can instantly affect prices and the availability of fuel.

That vulnerability has become more evident in recent months.

LNG Crisis in the Middle East

Europe is lagging behind the pace of LNG stock replenishment ahead of winter. Underground gas storage facilities are currently about 55% full, the lowest level for this time of year since 2021, according to LSEG.

At the same time, LNG imports into Europe have decreased after the start of the war in Iran. Imports in July are estimated at around 6.3 million metric tons – the lowest volume since September 2024, according to Kpler.

Partly the reason is stronger demand in Asia. LNG demand in the region rose, drawing about 4 million tonnes of supply from the United States in June and July, according to Kpler. Such cargoes could have gone to Europe, but are directed mainly to other regions.

After the Strait of Hormuz partially resumed operations following the interim agreement between the United States and Iran in April, a quick supply rebound from Qatar – previously a significant LNG supplier – was expected. But new energy pressure in the region and ongoing tensions between the United States and Iran reduced these hopes for supply rebound.

The European market is increasingly anxious due to a combination of low stocks, weak imports, and worsening supply prospects. Benchmark gas prices in Europe last week exceeded €60 per MWh – the highest level since the start of 2023.

Although prices may attract additional LNG cargoes, the region is likely to enter winter with gas stocks below the target 80% storage level.

Diesel Fuel Challenge

Europe is facing similar difficulties with diesel fuel – a key input for transport and industry, and a baseline fuel for heating through thermal systems.

Dependence on diesel is rising, but the war in Iran has constrained important supply routes and reduced stocks. In the United States, diesel inventories fell to a 23-year low in May, after which they partially recovered by about 10% in the week ended July 17, according to the U.S. Energy Information Administration.

China has restricted fuel exports, and Russia, the second-largest diesel exporter in 2025, announced a ban on diesel shipments in July after damage at processing plants. As a result, refining margins surged and diesel prices rose in Europe.

Diesel demand is down: according to the International Energy Agency, Europe’s diesel consumption fell by more than 6% in April, partly due to a shift to gasoline and electric vehicles, but high prices are also forcing businesses and consumers to cut consumption.

Even if the regional situation improves, damage to stocks is already done. Global LNG and diesel markets are likely to remain tight for months as countries rebuild stocks and compete for limited supplies.

In this reality, Europe is becoming weather-dependent: a warm winter could give a chance to avoid a full-scale energy crisis, but prolonged cold will underscore how tight the stocks and the energy system’s spare capacity are. After years of crises, the continent is once again on the edge of a serious energy crunch.

The author of the column – Ron Bousso, Reuters columnist.