Conor here: Bad news for Europe. Good news for American LNG shippers. From Reuters:
US LNG imports from Asia are expected to reach a record high of 4.23 million tons in July, nearly triple the 1.34 million tons from February. Asian demand for US LNG means that Europe has seen its imports from its top suppliers, with Kpler tracking arrivals of 3.94 million tonnes in July, down from a recent peak of 7.79 million in January and the lowest since November 2024.
The shift in US supplies to Asia led to total LNG supplies in Europe falling to an expected 6.90 million tonnes in July, the lowest since September 2024 and down from 8.72 million tonnes in July 2025.
The decline in LNG imports comes as the replenishment of Europe’s natural gas reserves remains well behind schedule, with data from energy analyst John Kemp showing a storage shortfall of 158 terawatt hours on July 7, about 22% wider than the 10-year seasonal average.
This means that European utilities will have to pay LNG prices at levels that drive Asian buyers such as China and India out of the market. It also means that the longer Qatari LNG remains unavailable amid the Iran conflict, the more likely prices will rise.
European countries have therefore turned to the Russian Yamal LNG plant, which draws almost all of the Siberian plant’s output during the first half of 2026, but such imports will be banned by the EU come January 1. Exciting times ahead.
By Tsvetana Paraskova, an energy and commodities journalist who has contributed to Oilprice.com for nearly a decade, covering global energy markets, commodities, and the political and economic developments that shape supply and demand. Originally published at OilPrice.
- Heave in Europe is disrupting electricity and transportation, with low river levels impeding barge traffic on the Rhine and raising transportation costs for fuel, coal, and other goods.
- High river temperatures have forced France to shut down nuclear power generation, reducing power output as reactors face cooling issues.
- Bad weather adds to Europe’s energy challenges, increases inflationary pressures and threatens economic growth and further disruptions from the Strait of Hormuz crisis.
An early summer heat wave in Europe warms major rivers and dries up water levels, disrupting energy delivery, power generation, and critical supply routes.
The heat wave in Europe started in early June, with record temperatures for weeks in a row in Europe’s biggest economies, Germany and France.
As a result, rainfall was very limited, and major inland shipping routes were affected by navigation restrictions, as well as restrictions on the amount of cargo that a boat could sail. This in turn has increased shipping costs and added further strains to the economy at a time when the long-running Strait of Hormuz crisis is already driving up European energy costs and inflation.
In addition to the economic and inflationary effects in Germany, the heatwave actually cut off electricity supplies in France.
Earlier this week, France’s nuclear power generation was cut by 6.4 gigawatts (GW), or about 14 percent of the country’s total daily power demand, amid a heat wave that raised river temperatures and reduced the ability of nuclear power plants to use water to cool reactors.
It’s not the first time France has had to curb emissions and reduce nuclear power production due to high summer temperatures.
France is still exporting electricity to its neighbors despite reducing nuclear power, but these events seem to be becoming more frequent as heat waves last longer and temperatures are higher.
The same is true of shipping disruptions on the 800-mile-long Rhine River, Europe’s largest inland waterway, which is vital for the supply of coal, diesel, and goods to Germany and central Europe.
The Rhine carries a large amount of Europe’s supplies, including fuel and coal, adding to the supply chain problems caused by the Hormuz crisis in sea lanes.
The Rhine River, which runs northwest from Switzerland through Germany, France, and the Netherlands into the North Sea, is Europe’s largest transportation hub for petroleum products. Due to heat waves and drought, the river levels are low and are now too shallow for many boats that export petroleum products. Barges are not fully loaded to keep them light on the water, which lowers transportation costs and slows the shipment of coal, fuel, and other goods.
The Kaub gauge, on the Middle Rhine between Koblenz and Mainz, sits in the shallowest part of the river. It sets the maximum draft and, therefore, tonnage of all boats traveling between the ports of Amsterdam-Rotterdam-Antwerp ARA and the industrial area of the Rhine valley, shared by Germany, France, and Switzerland.
The previous major crisis with low water levels in the Rhine was in 2022, and in 2018 before that.
The lowest Rhine levels of 2022 occur when the first energy crisis hits Europe and its economy after Russia’s invasion of Ukraine.
This summer, the low level of the Rhine due to rare rain and intense heat waves combined with the crisis in the Middle East put more pressure on the industry, energy supply and prices, transportation costs, and ultimately, inflation.
Water levels at the Kaub chokepoint are now at their lowest level in decades in mid-July, which has increased the cost of transporting diesel from Rotterdam to southern Germany by more than 50% in the past week.
Early heat waves and low river levels may weigh on German industry and the economy, which has managed to recover from the initial shock of the Middle East crisis.
Back in 2018, the low levels of the Rhine in November 2018 led to a 1.5% drop in German industrial production, which also reduced Germany’s GDP by 0.4%, according to the Kiel Institute for the World Economy.
This year, the late-June heatwave cost the German economy more than $6.8 billion, or 6 billion euros, a special analysis by economic research firm Prognos for German business daily Handelsblatt showed this week.
In the future, Germany could see three or four intense heat waves each summer with temperatures above 35 C, or 95 F. Prognos estimated that Germany could lose 1 billion euros, or 1.14 billion dollars, for each day that temperatures exceed 35 C. Thus, the annual damage to the German economy could exceed 20 billion euros, or 23 billion dollars.
