Global natural gas and LNG market: European gas storage injection improves, but Hormuz disruption and LNG competition leave the market tight ahead of winter

Overview

This UBS global gas tracker assesses European and US storage, LNG shipping flows and geopolitical risks before the 2025/2026 winter. Its central message is that Europe’s injection pace has improved but remains insufficient to remove concern over below-normal winter starting inventories, especially if LNG availability is constrained by Hormuz disruption or stronger Asian demand.

Core views

European gas prices briefly tested the low €70s/MWh before recovering to the mid-€70s/MWh. UBS attributes continuing market tension to limited signs that US-Iran negotiations will resume and to uncertainty over Gulf exports, as Iran has attached conditions to any broader reopening of the Strait of Hormuz. UBS Evidence Lab data showed just six LNG carriers transiting the strait so far in the month, evenly split between inbound and outbound traffic. LNG movements remain far below oil flows because the specialised LNG-carrier fleet is smaller and operational risks are higher. The regional LNG price spread is an additional concern for Europe. JKM regained a premium over TTF of about $1.5/mmBtu, which UBS says could divert cargoes away from Europe and worsen storage concerns. The report also flags Chinese President Xi Jinping’s US visit and the prospect that China’s 15% tariff on US LNG could be eased. UBS believes such a change could revive Chinese LNG demand and further tighten the global market. US LNG arrivals increased 48% week on week and 70% year on year. Flows to Asia rose 50% week on week and 154% year on year, while flows to Europe rose 47% week on week and 70% year on year. Europe received 70% of volumes and Asia 30%, restoring Europe’s share broadly to its level a year earlier. The cargo-flow data therefore show an improved near-term European supply position, but also underline Europe’s sensitivity to competition from Asian buyers. EU storage reached 70% on 22 September, below 82% at the same time last year and the 86% five-year average. Weekly injections improved from 1.3bcm to 1.6bcm, aided by a 13% week-on-week increase in LNG inflows and by cargoes directed to Europe when TTF traded at a premium to JKM in late August and early September. UBS’s base case is for storage to reach 74% by the start of winter, compared with 84% last year and a 90% five-year average. Achieving this case requires a further step-up in LNG imports; UBS then expects inventories to decline to around 25% by the end of winter. US natural-gas storage rose by 53Bcf, in line with consensus but below the 75Bcf build in 2025 and the 81Bcf five-year average. Inventories stood at 3,351Bcf, or 78% full, as of 18 September, remaining 4% above the five-year average. UBS therefore contrasts Europe’s relatively low pre-winter storage position with still-comfortable US inventories. Japanese utility-held LNG stock data were not reported during the week because of national holidays.

Analysis framework

UBS combines gas-price observations with weekly storage data, LNG cargo-tracking data and flow comparisons across Europe and Asia. It assesses Europe’s winter storage path by comparing current inventories and injection rates with last year and five-year averages, while using regional price spreads, shipping conditions and policy developments to judge whether LNG supply can sustain the required injection pace.

Methodology notes

• Industry AnalysisSupply-demand framework

  Gas supply-demand balance analysis

  UBS links LNG cargo availability, regional price spreads, European storage injections and expected winter withdrawals to assess whether supply can meet Europe’s storage needs.

• Other

  AIS-based maritime cargo tracking

  UBS Evidence Lab uses hourly vessel-location data, vessel characteristics and cargo capacity information to estimate LNG and LPG movements through ports, regions and maritime chokepoints.

Key data

• European gas priceMid-€70s/MWhRecovered after briefly testing the low €70s/MWh.
• JKM premium to TTFc.$1.5/mmBtuMay divert LNG from Europe toward Asia.
• US LNG cargo arrivals+48% w/w, +70% y/yEurope received 70% of volumes and Asia received 30%.
• EU gas storage70%As of 22 September, versus 82% a year earlier and an 86% five-year average.
• EU weekly storage injections1.6bcmUp from 1.3bcm in the previous week, supported by a 13% week-on-week rise in LNG inflows.
• UBS EU storage forecast74% at winter start; around 25% at winter-endThe winter-start forecast compares with 84% last year and a 90% five-year average.
• US natural gas inventories3,351Bcf, or 78% fullAs of 18 September; 4% above the five-year average.

Impact & implications

UBS sees the improved European injection pace as helpful but not sufficient to eliminate a below-normal winter storage outcome. Europe needs stronger LNG imports to reach UBS’s 74% winter-start base case, while the Hormuz situation, a JKM premium to TTF and possible renewed Chinese demand for US LNG could restrict the cargoes available to Europe.

Risks

• UBS identifies volatility in oil and natural-gas prices as a risk to its investment thesis.
• The report identifies margins in global refining, marketing and chemicals as a risk.
• Normal exploration risks associated with the oil and gas business are also cited.

What to watch

• Whether US-Iran talks resume and whether conditions permit a broader reopening of the Strait of Hormuz.
• LNG carrier transits through Hormuz and their effect on Gulf export availability.
• The JKM-TTF spread and whether it redirects LNG cargoes away from Europe.
• Developments during Xi Jinping’s US visit, including any easing of China’s 15% tariff on US LNG.
• Whether European LNG imports increase enough to support UBS’s 74% winter-start storage forecast.