Only 48 hours of energy left? UK gas reserves down as Middle East tensions shake energy markets
&imwidth=600&imheight=450&format=webp&quality=medium "Only 48 hours of energy left? UK gas reserves down as Middle East tensions shake energy markets")
Representative image. Photograph: (Pexels)
The gas market's disruption is partly driven by the near-total closure of the Strait of Hormuz, a vital route that carries nearly 20 percent of the oil flows and world's natural gas, along with production shutdowns in some places.
Britain currently has only about two days' worth of natural gas stored, sparking concerns about a potential shortage after conflict in the Middle East led to the shutdown of the world's largest gas facility and Iran blocked a key shipping channel. The new data published by Natural Gas has confirmed that the UK's gas reserves have diminished from 18,000 GWh last year to 6,700 GWh, which can meet up to just 1.5 days of demand. A similar volume is also held in liquefied natural gas (LNG) storage.
In contrast, many European countries have stored up several weeks of gas reserves, leaving them better equipped to handle supply disruptions. Because the UK has limited storage and must keep importing fuel, traders have been able to charge higher prices, forcing Britain to outbid European buyers. As a result, the UK is now paying the highest wholesale gas prices in Europe, according to a report in the the Daily Mail.
Closure of the Strait of Hormuz
The disruption in the gas market is partly driven by the near-total closure of the Strait of Hormuz, a vital route that carries nearly 20 percent of the oil flows and world's natural gas, along with production shutdowns in some places. At the beginning of the week, Qatar declared that it had suspended production at Ras Laffan, the largest natural gas facility of the world, following the Iranian bombardment.
Meanwhile, oil prices are likely to hit $100 a barrel sooner, rising to $150 if the war drags on, industry experts warned. The head of gas pricing at Argus Media, Natasha Fielding, 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."
She added that this was partly because the UK's meagre gas stockpiles that left 'more exposed to price spikes', and added: 'We can’t rely on withdrawing more from storage, so we have to get that gas from abroad.' Fielding underscored that traders might be tracking temperatures in Britain, waiting for more severe cold in the UK when it will be more urgently compelled to outbid other countries for gas.
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Earlier, the UK used to have gas stockpiling facilities for 12 day, however, the system collapsed after the funding was pulled out by the successive government ministers. The data of National Gas indicated that gas stores on Friday were at 18pc of their former capacity, while LNG storage were just nearly half full.
A National Gas spokesman stated that most of the UK's gas comes from Norway and its own North Sea. "The UK benefits from a wide range of gas supply sources. These provide the flexibility needed to balance supply and demand," the spokeperson told The Telegraph.
At the same time, concerns are mounting that oil prices could surge sharply due to disruptions in shipments through the Strait of Hormuz. Iran’s Revolutionary Guards have warned they would “set ablaze” any Western tanker attempting to pass through the strategic waterway, prompting hundreds of vessels to gather at both entrances of the strait while waiting for safe passage.
