European natural gas prices climbed by nearly 4% on Monday, reaching their highest level since January 2023, as growing concerns over new US sanctions on Iran raised fears of further disruptions to energy supplies from the Middle East.
The September futures contract at the Dutch TTF, Europe’s leading gas trading hub, increased by around 4% to €68.45 per megawatt hour.
The price increase followed the announcement of a major US sanctions campaign against Iran. US Treasury Secretary Scott Bessent introduced what he called Operation Economic Outcast, targeting Iranian sectors including aviation, shipping, gold, technology and digital assets.
Bessent said the US intended to cut off the financial channels supporting the Iranian government. He also warned that organizations involved in helping Tehran launder money could lose access to the US dollar financial system and indicated that a major financial institution could face sanctions.
The new measures came after US President Donald Trump warned that countries continuing to conduct trade with Iran could also face American sanctions.
Iran rejected the US threats, describing them as evidence of Washington’s frustration and arguing that additional sanctions would not force Tehran to surrender.
European energy markets are especially sensitive to developments in the Middle East because continuing tensions have severely disrupted traffic through the Strait of Hormuz. The situation has also delayed Qatari LNG shipments to Europe, creating additional pressure on regional gas supplies.
At the same time, a summer heatwave has increased demand for cooling across Europe, slowing the process of replenishing underground gas storage facilities.
The combination of geopolitical tensions, disrupted LNG deliveries, higher summer demand and slower storage replenishment has increased concerns about Europe’s ability to build sufficient gas reserves before the winter heating season.
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