
🇪🇺 L'Europe va SOMBRER : Le confinement énergétique arrive...
AI Summary
This summer, France, like every year, faces the challenge of replenishing its gas reserves, and the cost is expected to be exceptionally high. Following the 2022 Russian gas crisis and the Ormous oil crisis, the world is now grappling with what is being termed the "gas war."
Currently, South Pars, the world's largest natural gas field, is on fire. This field, straddling Qatar and Iran, holds the equivalent of 55 years of American consumption and its strategic processing facilities have been hit on both sides of the Persian Gulf. This is a concerning development, as Qatar is the second-largest global gas exporter after the United States, supplying Europe and France, among others. This event is expected to trigger a new gas crisis. Given the absurd mechanism where gas prices dictate electricity prices, another energy crisis, potentially more severe than 2022, is anticipated. This comes at a critical time when France and Europe are beginning to fill their reserves for next winter, with purchases and deliveries extending until the end of October. The situation in the Gulf will have a rapid and significant impact, and it is expected to be more violent this time because the protective measures in place during the 2022 crisis are no longer available. This winter, gas bills, supermarket prices, and fuel costs are expected to surge, alongside less obvious but equally critical items like fertilizers, semiconductors, and medicines. This energy crisis is poised to profoundly alter daily life.
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Managing logistics was already difficult without Hormuz, with oil prices exceeding $112 per barrel. The challenge of filling gas reserves without Qatar now includes competing with China, Indonesia, and Japan for tankers.
The crisis escalated approximately three weeks prior to the video's creation. On February 28, the United States and Israel attacked Iran, which retaliated by striking targets in the Gulf, including American bases, Saudi and Emirati oil installations, and critically, the Strait of Hormuz. Hormuz, a 40-km wide stretch of sea between Iran and the Sultanate of Oman, is a vital passage for one-fifth of global oil and one-fifth of liquefied natural gas (LNG). Prior to the conflict, hundreds of ships traversed it daily; now, only a handful do. The new supreme leader has declared the strait closed to Iran's enemies for the duration of the war. This immediately caused oil prices to jump from $71 to $114 per barrel in three weeks. Diesel in France surpassed €2 per liter, and filling a propane tank became 60% more expensive than last Christmas.
The situation worsened on March 18 when Israel struck South Pars on the Iranian side, igniting facilities at Assaluyeh, Iran's gas processing hub. In retaliation, Iran fired missiles at Saudi refineries and Ras Laffan on the Qatari side, the world's largest LNG export complex. Qatar Energy confirmed extensive damage. Ras Laffan had already been halted since March 2 following an initial drone attack, but the latest damage is far more severe. Qatar, despite its small size, is a major supplier, exporting 81 million tons of LNG annually, accounting for 20% of the global market. The International Energy Agency has described this as the largest supply disruption in the history of the energy market.
Globally, natural gas constitutes a quarter of all energy consumed and is the third-largest energy source after oil and coal. It is used for heating homes, powering factories, and generating electricity, contributing 23% of global electricity. In Europe, gas accounts for about a quarter of the energy consumed in the EU and is crucial for heating homes, offices, and factories during winter. Rising gas prices directly impact electricity prices because, in the European market, the most expensive operational power plant, often a gas-fired one, sets the price for everyone.
France is somewhat unique due to its nuclear power, with 68% of its electricity independent of gas. However, it is not immune to the crisis. Gas still represents 17% of France's final energy consumption, heats 35% of French homes, and one million households have propane tanks. Furthermore, 60% of France's gas imports are in the form of LNG, transported by ships that pass through Hormuz, with 10% of this LNG processed in Qatar.
Annually, Europe fills its gas stocks between April and October and depletes them during winter for heating and power generation. European law mandates that member countries' reserves must be 90% full by November 1, with a tolerance down to 80% under difficult market conditions.
The current filling season has started poorly. As of March 16, European stocks were at 29%, the lowest level in five years. For comparison, at the same time last year, they were at 45%, and in 2024, 55%. Even in 2021, before the war, stocks were at 61% by end of December, a level that already concerned analysts. The Netherlands is in a worse situation, with only 8% stock, an all-time low for this date. To reach the 90% target, approximately 60 billion cubic meters of gas need to be injected by autumn, which equates to about 700 LNG tanker shipments, 180 more than last year.
Since 2022, Europe has replaced Russian gas with LNG, primarily from the United States, which supplies 27% of its imports. Other suppliers include Qatar, Norway, and Algeria. The strategy was to avoid dependence on a single supplier. However, with Qatar's operations halted, 20% of the global LNG supply has vanished, and the critical maritime passage is compromised. The remaining options include American LNG, which already accounts for 57% of European LNG imports but has limited production capacity and longer transit times than Gulf tankers. Norway, which supplies gas via pipelines and is unaffected by Hormuz, cannot double its production overnight.
Ironically, Russian LNG remains an option. In February 2026, the EU imported 100% of the Russian Yamal project's cargoes, with France receiving nine, making it the largest client. Europe is committed to banning short-term Russian LNG contracts from April 25 and a total embargo by January 2027, yet purchases continue heavily. The market is highly competitive, with China, Japan, South Korea, India, and others vying for the same spot market cargoes. Normally, 80% of Qatari LNG goes to Asia.
Reuters estimated that the Hormuz blockade would add $10 billion to the energy bill compared to last year, but this was before the destruction of major gas conditioning facilities. Assuming bombings cease, it would take six months to restart and one to three years to return to full production capacity. Additionally, the Northfield East project in Qatar, intended to increase LNG transit by 33 million tons per year (half of Germany's annual consumption), has been paused due to the conflict. Even if the war ended tomorrow, this crucial additional capacity would not be available this summer.
In 2022, when Russia cut gas supplies, Europe absorbed the shock using options no longer available today. Firstly, existing stocks were higher, providing a buffer and time to find alternatives. Now, starting at 29%, reserves are almost empty as the filling season begins. Wood Mackenzie estimates that if the crisis persists, Europe might end the summer at 70% full instead of the required 90%, worse than the 76% in 2021 when Gazprom first manipulated supplies.
Secondly, the tariff shield in France, which capped gas and electricity prices to protect households, cost taxpayers and EDF around €100 billion. This shield has since been dismantled, the Aren mechanism (requiring EDF to sell nuclear electricity at reduced prices to competitors) lifted, and electricity bills have already risen due to increased taxes. Reimplementing such a shield now would be challenging given France's public debt, exceeding 110% of GDP.
Thirdly, the European Central Bank (ECB) had room to maneuver in 2022, with interest rates at zero, allowing it to raise them to curb inflation. Rates went from 0% to 4%. Today, rates have come down, but inflation was barely under control at 1.9% in the Eurozone. If energy prices surge again, inflation will follow. Raising rates again would directly slow the economy, making credit more expensive, stifling investment, and hindering growth, which is only 0.5% per year in the Eurozone.
The strategy of diversifying suppliers is also stalled. New LNG capacities expected by 2026, such as Golden Pass in the US or the Northfield East expansion in Qatar, are either delayed or halted. The anticipated wave of additional LNG to ease pressures will not arrive in time. The Russian LNG ban, effective April 25, will further remove cargoes from the market at the worst possible moment—during the filling season.
With old tools unavailable, new solutions are urgently needed. The US and Norway alone cannot compensate for Qatar's loss. Emergency measures include the International Energy Agency releasing 400 million barrels from strategic petroleum reserves, the largest release in its 52-year history. Trump drew 172 million barrels from US strategic reserves and temporarily lifted sanctions on Russian seaborne oil. Europe rejected this, and prices did not drop.
Brussels is exploring other options. Von der Leyen mentioned price caps or gas subsidies at the recent European summit. Energy Commissioner Jorgensen confirmed that targeted short-term measures are in preparation. Discussions also include postponing the Russian LNG ban, activating European-level joint purchases (as in 2022 to influence prices), or accelerating renewables and interconnections. However, these measures are unlikely to provide significant relief before summer or winter.
The immediate consequences are already visible: diesel at €2 per liter, double the cost to fill propane tanks, and rising electricity bills. More insidious effects include impacts on fertilizers. Nitrogen fertilizers are produced from natural gas using a century-old process: methane is converted to ammonia, then urea, essential for growing wheat, corn, and sunflowers. Without nitrogen fertilizers, agricultural yields collapse. Qatar's largest urea plant is shut down, India has closed three fertilizer plants due to lack of gas, and Bangladesh four or five. Additionally, one-third of global fertilizer trade passes through Hormuz. Urea prices surged 26% in two weeks, coinciding with planting season. Less fertilizer and lower yields will lead to higher food prices in the autumn. The Council on Foreign Relations estimates that one-third of global fertilizer trade is threatened by the crisis.
Another example is helium, used in party balloons but crucial for semiconductor manufacturing and MRI machines in hospitals. It has no substitute, and one-third of global production comes from Qatar as an LNG byproduct. With Ras Laffan halted, helium supply is disrupted. Spot prices doubled in a week. If this continues, the next chip shortage could stem from a gas associated with birthday parties, not rare earths or geopolitical tensions.
This crisis will also affect business expenses, driving up the price of almost everything, similar to 2022.
Some advice is offered to mitigate the impact. While electricity saving is already promoted by the government, those with propane or fuel tanks should fill them immediately, as waiting will increase costs. For investors, gold typically performs well during crises; despite a temporary dip during the video's preparation, fundamentals remain strong, and forecasts are optimistic. JP Morgan anticipates gold at $6,300 by year-end, and Deutsche Bank maintains its $6,000 target for December 31. For banking, those with variable-rate loans should consider converting to fixed rates before rates rise again. Anyone with a project should finalize it now.
After three crises in four years, it is also advisable to consider reducing dependence on imported fossil fuels and market electricity through solar panels, heat pumps, insulation, or electric vehicles. The video concludes by encouraging viewers to like and subscribe, and to produce as much as they consume to save money. The upcoming winter is expected to be difficult, but optimism and hope for peace in the Middle East are encouraged. For a competitive advantage in the market, Investing Pro is recommended, offering AI-based strategies, comprehensive fundamental analysis, and other features to identify investment opportunities. An exclusive 15% discount is available via a partner link in the description.