Britain currently has only “two days” worth of natural gas in storage, raising concerns about a potential supply shortage with the ongoing war in the Middle East, which is disrupting global energy flows.
Recent data from National Gas indicates that the UK holds approximately 6,700 gigawatt hours (GWh) of gas in reserve, a significant drop from about 18,000 GWh at the same time last year.
This remaining stockpile can only satisfy around 1.5 days of national demand.
The UK has a similar amount of liquefied natural gas (LNG) stored, leaving the country highly vulnerable to market disruptions.
In contrast, countries in the European Union have accumulated much larger reserves, believed to last several weeks and buffer against supply shocks.
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Energy traders are reportedly taking advantage of Britain’s limited reserves by charging a premium for supplies, knowing the UK must outbid European competitors to secure shipments. Consequently, Britain is now facing the highest wholesale gas prices in Europe.
The upheaval in global gas markets has been driven partly by the near-total closure of the Strait of Hormuz, a critical shipping lane through which approximately 20% of the world’s oil and liquefied natural gas is transported.
Additionally, supply has been affected by production shutdowns in the Gulf. Earlier this week, QatarEnergy announced that it had halted operations at Ras Laffan Industrial City, the world’s largest natural gas processing facility, after it came under bombardment from Iran.
These developments have heightened fears that the conflict could lead to a broader energy crisis if shipping routes remain blocked and major production sites stay offline.
The Daily Mail reported Natasha Fielding, head of gas pricing at Argus Media, a leading publisher of commodity data, said: “The price of gas in the UK has increased by more than almost anywhere in Europe.
“The UK gas hub price is now above the Dutch TTF [the main European gas hub] all the way from now until the end of May. Before this week, the UK was priced below the EU.”
Feilding said this in part because the UK’s low gas stockpiles have left us “more exposed to price spikes.”
She added: “We can’t rely on withdrawing more from storage, so we have to get that gas from abroad.”
A National Gas spokesman told The Telegraph: “The UK benefits from a wide range of gas supply sources. These provide the flexibility needed to balance supply and demand.”
Professor Mohamed El-Erian of the University of Pennsylvania told BBC Radio 4’s Today programme: “Once again, we see the UK more vulnerable to external shocks than otherwise that in turn is going to translate into higher mortgage rates.
“So the average person will get hit from multiple sizes, unfortunately.
“The average person is going to face higher energy prices, but also higher mortgage rates and slowly but surely, noticeable increases in a broad range of goods and services because of supply chain disruptions.”
A spokesperson for the Department for Energy Security and Net Zero said: “We are working with industry to ensure the gas system is fit for the future, including maintaining security of supply.”
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