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LNG Disruptions Could Keep Europe Short of Winter Gas Storage Target, RBC Says

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Iran-related LNG supply disruptions could prevent Europe from meeting winter gas storage targets and keep regional gas prices elevated despite expectations that the Strait of Hormuz will reopen, RBC Capital Markets said in a Thursday note.

RBC said renewed Middle East tensions forced markets to reassess Qatar's plans to restore LNG production, reversing expectations of stronger supply and lifting European gas prices above $20 per million British thermal units.

Qatar halted LNG production after the Iran conflict disrupted operations, taking about 17% of export capacity offline for three to five years. Renewed fighting derailed plans to restore 50% within a month and 80% within two months.

Although Qatar supplied only about 10% of Europe's LNG imports in 2025, accounting for 7% of the region's gas supply, Europe remains highly exposed to global disruptions following the loss of Russian pipeline gas.

Europe entered last winter with gas storage 83% full, meeting the European Union's amended target. A colder winter reduced inventories to 28% by April 1, while the Strait disruption left storage at 54%, or 16% below the five-year average, the note said.

RBC said new LNG supply continues to move the market toward a longer-term surplus, although the transition has been delayed. Additional supply growth has prevented gas prices from returning to levels seen during the Russia-Ukraine conflict.

Qatar's LNG exports fell by about 25 million metric tons during the first half of 2026. Even so, global LNG supply increased slightly as new projects offset part of the lost production, RBC Capital Markets said.

The European Union now allows countries to meet its storage target between Oct. 1 and Dec. 1, with 10% flexibility and scope for another 5% under persistent unfavorable market conditions, RBC Capital Markets said.

RBC Capital Markets modeled Europe's gas storage using current LNG market conditions, including Asian demand, the European Union's LNG market share, Norway's production and steady regional gas demand.

The firm said Qatar's LNG exports remain the biggest variable for Europe's winter storage outlook.

RBC estimates storage would reach 72% by Nov. 1 if Qatar's exports stop from August, 74% under a partial recovery, and 76% if exports fully recover by October, with inventories falling further by year-end in all cases.

None of those scenarios would allow Europe to reach its 80% storage target by Dec. 1 under RBC's base-case assumptions. The bank said Europe must keep prices elevated to attract LNG cargoes from Asia, while Red Sea security risks could further disrupt shipments.

Nearly a quarter of Qatar's LNG exports went to China in 2025, supplying about 30% of the country's LNG needs.

RBC Capital Markets said weak Chinese demand has continued despite summer cooling demand, and any rebound could tighten LNG availability for Europe, although Strait of Hormuz tensions and firm Asian spot prices may limit a pickup.

RBC Capital Markets modeled Europe's gas storage using current LNG market conditions, including Asian demand, the European Union's LNG market share, Norway's production and steady regional gas demand.

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