Britain is facing a potential energy crisis after its natural gas reserves fell to just 1.5 days’ worth of supply, leaving the country more exposed than almost any other nation in Europe as the Middle East conflict disrupts global energy markets.
New data published by National Gas shows the UK’s gas stores have collapsed from 18,000 GWh last year to just 6,700 GWh — equivalent to roughly a day and a half of national demand. A similar quantity is held as liquefied natural gas. By contrast, European nations have maintained several weeks’ worth of reserves, leaving Britain in a significantly weaker position as supply disruptions mount.
The crisis has been driven by two major developments. Qatar announced at the start of the week that it had suspended production at Ras Laffan — the world’s largest natural gas facility — after it came under Iranian bombardment. Simultaneously, Iran’s near-total closure of the Strait of Hormuz, through which approximately 20 per cent of the world’s gas and oil flows, has severely disrupted global supply chains. Iran’s Revolutionary Guard has vowed to “set ablaze” any Western tanker attempting to use the strait, with hundreds of vessels now stranded at either end of the waterway.
The consequences for British consumers and businesses are already visible in wholesale prices. Natasha Fielding, head of gas pricing at Argus Media, said the UK gas hub price had risen above the Dutch TTF — Europe’s main gas benchmark — for the period running through to the end of May. “Before this week, the UK was priced below the EU,” she said, explaining that Britain’s depleted storage leaves it “more exposed to price spikes” and unable to draw on reserves, forcing it to continually outbid European competitors for imported supply. She warned that a cold spell would intensify that pressure further.
The UK previously held up to 12 days’ worth of gas in storage, but that capacity has diminished significantly following decisions by successive governments to withdraw funding from the storage infrastructure.
Oil prices have surged in parallel, with American crude settling at $90.90 on Friday — up 36 per cent in a week — and Brent climbing 27 per cent over the same period to $92.69. Goldman Sachs warned that the current drop in Middle Eastern oil output is 17 times larger than the peak reduction seen after Russia’s invasion of Ukraine, and said prices would likely exceed $100 next week if no resolution emerges. The bank added that prices for refined products could surpass the peaks seen in 2008 and 2022 if Strait of Hormuz flows remain suppressed throughout March.
Professor Mohamed El-Erian of the University of Pennsylvania told BBC Radio 4’s Today programme that British households should brace for pressure “from multiple sides.” He said the conflict would feed through into higher energy bills, higher mortgage rates and broader price increases across goods and services as supply chains are disrupted.
Any increase in household energy bills resulting from the current price surge would be reflected in the new energy price cap due to be set in July.
