German economy ‘acutely’ at risk after Europe burns through gas reserves

Berlin: The situation in Germany is getting pretty tense. The country’s energy-heavy manufacturing sector is feeling the heat as Europe runs low on gas. It’s been a wild ride, with reserves dropping faster than they have in years.

Recent data shows that gas stockpiles have plummeted by 25% from their peak, and now they’re just over 70% full across Europe. That’s a big drop from about 86% last year. With cold weather hitting from Spain to Poland, gas prices are climbing, hovering at their highest in over a year.

Germany is taking the biggest hit, with its storage sites now at 78% capacity, down from 81% just a week ago. Other countries like France and Britain are also struggling, with reserves at 57% and 55% respectively.

Experts are worried that these low storage levels could keep prices high through the summer when countries usually stock up. Hamad Hussain from Capital Economics mentioned that the demand for natural gas might stay strong as Europe tries to refill its inventories.

The situation is compounded by the recent “Dunkelflaute,” a weather event that has limited renewable energy production. Florence Schmit from Rabobank pointed out that countries like Germany and Italy, which have high gas needs, will feel the brunt of these price hikes.

Adding to the chaos, Ukraine has shut down the last route for Russian gas, which is pushing prices even higher across Europe. Analysts say this could hit Russia’s economy too, but Europe is now more vulnerable to market swings as it turns to global liquefied natural gas to fill the gap.

Tatiana Orlova from Oxford Economics warned that Europe might end up buying more Russian LNG to make up for the lost pipeline supplies. It’s a tricky situation, and everyone’s keeping a close eye on how it unfolds.