European gas prices hit highest level since January 2023 amid Iran sanctions concerns

European natural gas prices climbed nearly 4% on Monday to their highest level since January 2023 after the US launched a sweeping campaign to isolate Iran from the global financial system, heightening concerns over further disruptions to Middle Eastern energy supplies.

The September futures contract at Dutch-based TTF, Europe’s benchmark gas trading hub, rose around 4% to €68.45 ($79.85) per megawatt-hour.

US Treasury Secretary Scott Bessent announced Operation Economic Outcast, an “unprecedented” sanctions campaign targeting Iran’s aviation, shipping, gold, technology, and digital asset sectors.

“Our objective is to sever every economic lifeline that sustains this tyrannical regime until Tehran stands alone,” Bessent told reporters.

He warned that any entity facilitating money laundering for Tehran would be permanently removed from the US dollar system and signaled that a major financial institution could be sanctioned by the end of the week.

The measures follow US President Donald Trump’s warning last week that Washington could sanction countries continuing to trade with Tehran.

Iran rejected the threats as a sign of desperation and argued that further sanctions would fail to force the country into submission.

European gas markets remain particularly vulnerable to developments in the Middle East, as tensions have kept the Strait of Hormuz largely closed and delayed Qatari liquefied natural gas shipments to Europe.

The disruption has coincided with stronger cooling demand during the summer heatwave, slowing the pace at which European countries are replenishing inventories.

The combination has raised pressure on storage levels and heightened concerns about whether Europe will enter the winter heating season with an adequate supply buffer.