AMSTERDAM, Netherlands: Europe could face a serious gas shortage if shipping disruptions through the Strait of Hormuz continue for another one to three months, senior executives at Norwegian energy company Equinor warned on May 21.

Gas storage facilities across Europe are currently just above 35 percent full, well below the seasonal average of around 50 percent, according to data from Gas Infrastructure Europe.

European Union countries are required to raise storage levels to 90 percent between October and early December to prepare for winter demand, but the ongoing conflict in Iran and disruptions to global energy supplies have complicated efforts to build those reserves.

"If the war stopped tomorrow, with free flow to the Strait happening quickly, we could come to an acceptable, but tight storage level of 75 percent, but if the closure continues for one to three months, it could become critical," Helle Ostergaard Kristiansen, Equinor's senior vice president for gas and power trading, told Reuters.

The Strait of Hormuz is one of the world's most important energy shipping routes. The conflict involving Iran has disrupted tanker traffic through the passage, contributing to higher energy prices and concerns over fuel availability.

Equinor executives said Europe was already struggling to refill storage before the latest escalation because current market conditions discourage stockpiling. Gas contracts for winter delivery remain cheaper than summer contracts, reducing incentives for companies to buy and store fuel now for later use.

Analysts said governments may need to intervene through incentives or regulations to encourage storage building if market conditions do not improve.

"We saw that in 2022, when the governments imposed regulations on storage filling... it was very costly for them. So the market itself can probably balance the situation through price signals," said Peder Bjorland, Equinor's vice president for gas trading, on the sidelines of the Flame energy conference in Amsterdam.

Bjorland said sustained high gas prices could also reduce demand across Europe by encouraging industries and utilities to switch to other energy sources such as coal or renewables.

"If we have prices up to what we saw in the beginning (of the Iran war), around 60-70 euros per megawatt hour, then we have estimated that gas to power alone could actually result in a reduced demand of around 10 billion cubic meters," Bjorland said.

European benchmark gas prices at the Dutch TTF hub were trading around 50 euros per megawatt hour on May 21 after surging to 74 euros in March, their highest level since January 2023.