European gas markets are under pressure again, and many commentators are asking whether another UK energy crisis is developing. The headlines are certainly warning of a fresh European energy crisis this winter. Gas storage across the continent is running well below normal, wholesale prices have jumped, and commentators are drawing comparisons with the shock of 2022. If you run a UK business, it’s worth understanding what’s actually changed, what hasn’t, and what you can do about it, regardless of how the geopolitics plays out.
Quick Answer
This isn’t a repeat of 2022. European gas storage is genuinely low for the time of year, and prices have risen sharply since renewed disruption around the Strait of Hormuz. Wood Mackenzie’s own analysis notes that prices haven’t returned to 2022’s record highs, crediting Europe’s investment in renewables since then with a more resilient position, though it still describes Europe as approaching energy-crisis territory. Forward markets already price in a winter premium, so a rise in business energy costs is likely regardless of how the situation develops. The practical priority for UK businesses is to check whether they’re claiming every discount, exemption, and procurement advantage available to their business, a step that pays off whichever way this winter goes.
Key Takeaways
• European gas storage was just above 50% in late July 2026, historically low for the time of year, following renewed Strait of Hormuz disruption.
• Wood Mackenzie says this is not a repeat of 2022, and that prices haven’t returned to those record highs, though it describes Europe as “approaching energy crisis territory.”
• The EU hasn’t lowered its 90% storage target. It’s added flexibility, allowing member states to fall up to 15 percentage points short under difficult market conditions without breaching the rules.
• Winter gas contracts are already trading at a premium to summer ones, so wholesale price rises are partly priced in regardless of what happens next.
• Regardless of how the winter plays out, UK businesses can control whether they’re claiming CCA or EII discounts they may be entitled to. These can outweigh anything negotiable on a standard supply contract.
What’s Actually Happening in the Gas Market?
Much of what follows draws on analysis from Wood Mackenzie, a global energy research and consultancy firm headquartered in Edinburgh that’s widely cited across the industry for independent market analysis, and from Goldman Sachs’ commodities research team. Taken together, these reports paint a more nuanced picture than many news headlines currently suggest.
The Storage Squeeze
Wood Mackenzie’s own analysis, published 27 July 2026, puts European gas storage at just above 50% (its figures cite both “above 50%” and a more precise 54% for late July), a historically low level for that point in the year. The cause is renewed conflict disrupting the Strait of Hormuz, a route that normally carries around a fifth of global LNG exports. Spot gas prices have risen more than 50% since 12 June and are now trading above €60/MWh.
Wood Mackenzie’s central scenario, assuming Qatari LNG capacity returns to normal by the end of September, has European storage reaching around 75% by 1 November, against a five-year average of 90% for that date. If the Strait remains disrupted for a further two months, it expects storage to end up below 70%. “Low European inventories, strong Asian demand and limited new LNG supply growth almost guarantee elevated prices through this winter and into 2027,” said Massimo Di Odoardo, Wood Mackenzie’s Vice President for Gas and LNG Research.
How High Could Prices Go?
Goldman Sachs has raised its own forecasts for Dutch TTF gas, the European benchmark, to around €60/MWh for the remainder of Q3 2026 and €53/MWh for Q4 2026, up from earlier forecasts of €41/MWh and €40/MWh. Its analysts have also modelled scenarios in which prices could approach €74/MWh if Hormuz LNG flows were fully halted for a month, or exceed €100/MWh if the disruption ran longer than two months.
Why “Storage at a Historic Low” Isn’t the Whole Story
There’s an important nuance most coverage leaves out. The EU hasn’t actually lowered its headline gas storage target. The Council of the EU formally adopted the amended gas storage regulation on 18 July 2025, and it maintains the binding target of 90% of capacity. What has changed is the flexibility around it: member states now have a window running from 1 October to 1 December to meet the target, rather than a hard 1 November deadline, and a 10% flexibility applies automatically in difficult market conditions. The European Commission can extend that by a further 5% through a delegated act if conditions stay unfavourable, meaning storage can legitimately sit as low as 75% of capacity and still be fully compliant.
That distinction matters. Much of the alarm in current coverage compares this winter’s storage levels against the old 90% figure as if any shortfall were a policy failure. In reality, the EU built this tolerance into its own rules for exactly this kind of price-driven scenario, and Wood Mackenzie’s central scenario of storage reaching around 75% by 1 November sits right at the edge of what the rules already allow for. Falling short of 90% this winter, within that margin, is compliant under the EU’s own rules.
None of this means the underlying risk is fake. The Hormuz disruption is real, prices have genuinely moved, and storage would still be well below the old five-year average even in the best case. It simply means “storage is at a historic low” is doing more rhetorical work in the headlines than the regulatory picture alone supports.
Wood Mackenzie is explicit about the historical comparison, too: prices haven’t returned to the levels set after Russia’s invasion of Ukraine in 2022, and sustained investment in European renewables since then has reduced the power market’s exposure to gas specifically. Its own framing is that Europe is “approaching energy crisis territory,” a step short of a full-blown crisis.
What This Means for Q4 and Winter Pricing
UK wholesale gas markets are already pricing in a winter premium. Forward contracts for the final quarter of 2026 and the winter period trade meaningfully above summer 2027 contracts. This backwardated curve reflects the risk priced in by the market right now, ahead of any confirmation of how the Hormuz situation resolves.
Much of the advice currently being published focuses on fixing contracts before winter prices rise further, with a reminder that fixing your rate now avoids the worst of the winter premium. It’s reasonable advice, and it’s also the same advice every energy broker is currently publishing, treating unit rates as if they were the only lever available to a business trying to manage rising energy costs.
What’s Actually Within Your Control
The wider market conditions behind this story sit outside any individual business’s control. What is within your control is whether you’re claiming every discount and exemption your business is entitled to, and for many businesses, that matters more than a few pence per kWh on a supply contract. Those structural savings remain available whether wholesale prices rise, fall, or stay broadly where they are.
If your sector holds a Climate Change Agreement, you can cut your Climate Change Levy bill by up to 92% on electricity and 89% on gas. Fifty-three sectors currently have an agreed umbrella agreement in place, covering everything from steel and chemicals to food and drink, data centres, and supermarkets, and it’s worth checking even if you’ve previously assumed your sector wasn’t covered.
For larger electricity users, the Energy Intensive Industries (EII) Exemption Scheme offers relief worth roughly £65-87 per MWh for businesses that clear the scheme’s electricity intensity test, calculated as electricity spend against a proxy for gross value added. Eligibility depends on sector and a qualifying NACE code, but for the businesses it applies to, it dwarfs anything negotiable on a standard supply contract.
If network charges are creeping up, too, our TNUoS article from April breaks down what NESO’s confirmed 2026/27 transmission charges mean for your site, separate from the gas market story covered here.
Check Your CCA Savings
The Climate Change Agreement discount is one of the biggest levers that most eligible businesses haven’t checked. Use the calculator below to see roughly what a CCA could be worth on your current electricity and gas consumption, and whether your sector is likely to qualify.
Climate Change Agreement savings calculator
Estimate your potential Climate Change Levy saving under a Climate Change Agreement, and check whether your sector is likely to be covered.
Check Your EII Exemption Eligibility
If you’re a larger electricity user, the EII Exemption Scheme works differently from a CCA; it’s based on an electricity intensity test rather than sector membership alone. The calculator below gives an indicative read on whether your business is likely to clear that test, and what the exemption could be worth if it does.
EII Exemption Scheme Eligibility & Savings Calculator
Estimate whether your business is likely to clear the electricity intensity test for the EII Exemption Scheme, and what it could be worth.
What UK Businesses Should Actually Do Now
A sensible response to this winter’s story has less to do with predicting where gas prices land in December and more to do with getting the fundamentals right before the pressure hits.
- Check your sector against the current 53 CCA-eligible umbrella agreements, not just the obvious heavy-industry ones.
- If you’re a large electricity user, run the numbers on the EII exemption scheme’s intensity test before assuming it doesn’t apply.
- Review your renewal timing against the forward curve rather than fixing your whole book at once while winter carries the heaviest premium.
- Get a full view of your non-commodity charges with a business energy audit; discounts and exemptions are only part of the picture, and it’s easy to miss savings that are already available to you.
None of this depends on how the Hormuz situation resolves or whether this winter turns out mild or brutal. It’s available to you either way, and it’s exactly the kind of ongoing account management and energy procurement support we provide alongside compliance and exemption work.
UK Energy Crisis: Frequently Asked Questions
A few of the questions we’re hearing most often from UK businesses this month.
Is this the same as the 2022 energy crisis?
No. Wood Mackenzie’s own analysis makes it clear that prices haven’t returned to the record levels set after Russia’s invasion of Ukraine in 2022, and that sustained investment in European renewables since then has reduced the power market’s exposure to gas price swings. Its framing is that Europe is “approaching energy crisis territory,” a step short of a full 2022-style crisis.
Will UK business energy prices definitely rise this winter?
Forward markets already price in a premium for winter gas compared with summer contracts, so a rise is partly priced in already. Whether it goes further depends largely on how long the disruption of the Strait of Hormuz lasts, which nobody can predict with confidence.
Has the EU lowered its gas storage target?
No, the headline target remains 90% of capacity, as confirmed when the Council of the EU formally adopted the amended regulation on 18 July 2025. What has changed is the flexibility around it: member states now have a longer window to meet the target and can fall up to 15 percentage points short (10% automatically, plus a further 5% at the European Commission’s discretion) under difficult market conditions without breaching the rules.
What is a Climate Change Agreement, and could my business qualify?
A Climate Change Agreement (CCA) is a scheme that discounts your Climate Change Levy bill by up to 92% on electricity and 89% on gas if your sector has an agreed umbrella agreement and you meet an efficiency target. Fifty-three sectors currently qualify. See our Climate Change Agreement page for the full list of sectors and how to check your eligibility.
What is the EII Exemption Scheme?
The Energy Intensive Industries Exemption Scheme reduces electricity costs for businesses that clear an electricity intensity test, broadly, electricity spend as a share of gross value added. It’s worth roughly £65-£87 per MWh for businesses that qualify.
Should I fix my energy contract now?
That depends on your renewal timing and risk appetite, and it’s worth a proper conversation rather than a blanket rule. Winter contracts are already trading at a premium, so fixing everything at once locks in the most expensive part of the curve. A phased approach, reviewed against your specific renewal window, is usually more resilient than an all-or-nothing decision.
Article Sources
- Wood Mackenzie. European Gas Storage at risk of being below 70% ahead of Winter 2026/27. 27 July, 2026
- Council of the EU. Gas storage: Council greenlights 2-year extension of reserves filling rules to safeguard winter supply. 18 July, 2025
- Investing.com. Goldman Sachs hikes European gas price forecast on Hormuz disruption. 27 July, 2026
- GOV.UK. Climate change agreements. Accessed 7 August, 2026
- GOV.UK. Climate change agreements: umbrella agreements collection. Accessed 7 August, 2026
- Department for Energy Security and Net Zero. EII exemption certificate guidance (PDF). May 2026 revision.
