- The EU's self-imposed sanctions have left European energy prices two to three times higher than in the United States and China.
- Natural gas storage levels are at their worst in 15 years heading into winter, with prices potentially needing to exceed 100 euros per megawatt-hour.
- German Chancellor Merz and French President Macron acknowledge the sanctions-driven energy crisis is eroding European industrial competitiveness.
- Hungary and Slovakia are suing the EU in court over the Russian energy ban, arguing Brussels bypassed its own approval rules.
- Brussels is pressing ahead with a total Russian energy phaseout by 2027 despite warnings of physical shortages and power cuts.
The European Union's push to eliminate Russian energy imports by 2027 is running headlong into economic reality, as top officials now acknowledge the bloc's self-imposed sanctions have left it paying two to three times more for power than the United States or China. European Commission President Ursula von der Leyen said at a Paris business conference this month that the cheap energy imports that once underpinned Europe's prosperity have "disappeared," dealing a visible blow to the continent's competitiveness — although she stopped short of directly blaming the sanctions policy for the price gap.
The admission comes as the EU faces the worst natural gas storage levels in 15 years heading into winter, according to projections from consultancy Wood Mackenzie. Energy prices have spiked amid the U.S.-Israeli war on Iran, with European benchmark Dutch TTF futures climbing above 68 euros per megawatt-hour — the highest since early 2023. Analysts at Goldman Sachs have said gas futures may need to top 100 euros per megawatt-hour before Asian buyers pull back enough for Europe to get through winter without depleting its reserves.
European leaders acknowledge the damage
German Chancellor Friedrich Merz said last month that Berlin's self-imposed embargo on Russian energy was the primary driver of the "ongoing energy crisis" eroding German industry. Before 2022, Russia supplied roughly 55% of Germany's natural gas imports.
French President Emmanuel Macron similarly warned earlier this year that the EU was in "emergency mode" over soaring energy costs after replacing Russian pipeline gas with more expensive American liquefied natural gas.
Von der Leyen, speaking at the La Rencontre des Entrepreneurs de France conference in Paris on Thursday, said that "for a long time, the European economic model relied on" cheap energy. Those pillars have now vanished, she said. "European prices remain two to three times higher than in the United States and China," she added.
Storage levels at historic lows as winter approaches
The EU's gas stores stand at roughly 63% capacity, about 18 percentage points below the five-year average, according to Gas Infrastructure Europe data — one of the lowest levels on record for this time of year.
A combination of factors has left Europe vulnerable: a sweltering summer drove up demand for air conditioning, heat forced nuclear plants to reduce output, and weak wind generation further tightened supplies. Shipping disruptions through the Strait of Hormuz have also curtailed LNG exports from major Gulf producers like Qatar during Europe's critical storage refill season.
"Europe is currently on track to start the winter with an inadequate storage buffer against late winter cold," Matt Drinkwater, head of European Gas at Energy Aspects, told CNBC. He warned that if Middle East supplies stay constrained heading into winter, Europeans could be looking at steep gas prices, rising bills, and possibly even limits on how much gas industry is allowed to use.
Hungary and Slovakia fight the phaseout in court
The push to ban Russian energy has exposed sharp rifts among member states. Hungary and Slovakia argue Brussels sidestepped its own rules to force the ban through, treating it as an ordinary trade matter decided by majority vote rather than a sanctions policy requiring unanimous approval — and both countries are now suing the EU over it. Hungarian Prime Minister Viktor Orbán has gone further, publicly calling on the bloc to suspend the ban altogether.
The dispute isn't limited to gas. Ukraine shut down the Druzhba pipeline in late January, severing the flow of Russian crude to Hungary and Slovakia; Kyiv says the line was hit by a Russian drone strike, but Budapest has released satellite imagery it says shows otherwise. Despite Ukraine's treaty obligation to keep energy flowing to EU members, the European Commission has not pressed Kyiv on the matter.
The Commission has already legislated to ban all Russian gas by 2027 and plans a bill banning Russian oil just three days after Hungary's parliamentary election. Reuters has reported the timing was chosen specifically to keep the ban from becoming a campaign issue in Hungary.
Brussels presses ahead despite the toll
Von der Leyen has reaffirmed that the Commission will proceed with a total phaseout of Russian energy even if it means physical shortages or the threat of power cuts. At an emergency meeting of commissioners, she argued the Middle East crisis shows "the risks of relying still too much on fossil fuels" and called for replacing Russian energy with "homegrown green energy."
The financial toll is already measurable. The Centre for Research on Energy and Clean Air found that the Netherlands, Italy, France and Spain absorbed nearly €41 billion in extra fossil-fuel costs between March and August 2026 without importing any new energy volumes — a dramatic illustration of how far the fallout from Brussels' energy policy has spread through European economies, even as the bloc's own leadership shows no sign of reconsidering course.
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