Gas storage crisis threatens winter energy bills as wholesale prices surge
Britain faces mounting energy market turbulence as gas storage levels across Europe sink to historically low levels and wholesale prices surge, prompting warnings that household bills could rise sharply this winter.
Gas storage facilities across Europe currently stand at just 54% of capacity, according to energy research firm Wood Mackenzie. Typically by late July, storage sites have been refilled to 70% of their capacity during the summer months before winter withdrawals begin.
The EU energy regulator ACER has warned that liquefied natural gas imports will need to increase by around 13% over 2025 levels to meet summer demand and reach the 80% filling target before winter. Even under the best-case scenario, Wood Mackenzie projects Europe will enter the heating season at 75% capacity, well below the 90% five-year average.
Equinor, Europe's largest gas supplier, stated in late July that the continent is unlikely to reach even its lowered target of 80% storage capacity before winter begins.
Middle East conflict drives supply concerns
The storage shortfall has been compounded by ongoing conflict between the United States and Iran, which has disrupted energy supply chains through the Strait of Hormuz. This vital shipping channel handles approximately one-fifth of global oil production and one-fifth of global LNG shipments, with Qatar accounting for the bulk of LNG volumes passing through the strait.
Qatari gas production, which had been planned to expand from 77 million tonnes per year to 142 million tonnes by 2030, is currently operating below full capacity and is not expected to return to normal operations until the second half of this year.
The combination of low storage levels and Middle East disruption has driven spot natural gas prices more than 50% above their June lows. European gas hub prices rose 34.39% over the month ending 28 July 2026, reaching 57.55 EUR/MWh, and are up 65.68% compared to the same time last year.
EU gas storage levels at the end of March 2026 had already fallen below 30% in several markets, due to a colder-than-average winter that increased consumption. This lower starting point has made it harder to refill facilities during the summer months.
UK particularly vulnerable
Britain is especially exposed to gas supply disruptions due to its limited storage infrastructure. The UK has just nine active natural gas storage facilities providing a combined capacity of 3.2 billion cubic metres, equivalent to approximately 19 days of average consumption when completely full, but less than a week's worth during peak winter demand.
This gives the UK significantly less storage capacity compared to other European countries, with supplies equivalent to just 12 days' consumption or 7.5 peak winter days on average.
Nearly half of Britain's storage capacity comes from the Rough facility, a depleted gas field off the coast of East Yorkshire with approximately 1.5 billion cubic metres capacity. The site was closed in 2017 and only partially reopened in October 2022, highlighting the fragility of UK storage infrastructure.
Daniel Hanlon, operations director at Volt Solutions Group, explained that if storage enters the heating season significantly below target, it leaves Europe more exposed to supply disruptions or periods of high demand, which can increase wholesale gas prices. He noted that sustained price increases would ultimately feed through to UK businesses and households as suppliers factor higher wholesale costs into future energy contracts.
Impact on household bills
The wholesale price surge is already affecting consumers. Two weeks ago, the cheapest fixed-rate energy deal available was a 15-month tariff priced at £1,424 per year for a typical household. Today, the cheapest fix on the market is a 24-month deal from Outfox Energy at £1,535, representing an increase of £111 or nearly 8% in just two weeks, according to Uswitch.
British Gas and EDF expect the October energy price cap to rise by 5.8% to £1,760, which would make it the most expensive winter since the Energy Price Guarantee was introduced. The Energy Price Guarantee, established at £2,500 in 2022 when the price cap peaked at £3,549 for a typical dual fuel household, provided crucial protection for consumers during the last energy crisis.
The current cap, in place from 1 July to 30 September, sees the typical household on a dual-fuel tariff paying £1,862 per year on average by direct debit. Ofgem, Britain's energy regulator, sets the price cap every three months, affecting around 33 million households.
Massimo Di Odoardo, vice-president of LNG research at Wood Mackenzie, warned that low European inventories, strong Asian demand and limited new LNG supply growth almost guarantee elevated prices through this winter and into 2027.
Sabrina Hoque, an energy expert at Uswitch, advised that suppliers are already warning of a bigger jump in the price cap in October, with another rise to follow in January. She urged households to consider protecting themselves against further increases by fixing their bills.
Wood Mackenzie also cautioned that the EU faces a difficult calculation: pressing ahead with both a proposed ban on all Russian LNG imports from January 2027 and more stringent methane emission regulations could constrain import flexibility at precisely the moment Europe needs it most.
