European gas prices climb to highest level since January 2023

European natural gas prices rose sharply on Monday, with the benchmark Dutch TTF contract approaching €68.45 ($79.85) per megawatt-hour as new US measures against Iran raised fresh concerns about energy supplies from the Middle East.

Sanctions fuel market concerns

The September TTF futures contract, widely used as Europe’s benchmark for natural gas trading, gained nearly 4%, reaching its highest level since January 2023.

The increase followed Washington’s announcement of a broad sanctions campaign against Iran. US Treasury Secretary Scott Bessent said the measures would target sectors including aviation, shipping, gold, technology and digital assets as part of efforts to restrict Tehran’s access to international finance.

Bessent also warned that institutions involved in money laundering for Iran could lose access to the US dollar system, while indicating that another major financial institution could face sanctions before the end of the week.

Hormuz disruption adds pressure

The latest move comes after US President Donald Trump warned that countries continuing commercial ties with Iran could also face penalties. Tehran, meanwhile, has dismissed the pressure campaign and argued that additional sanctions would not force Iran to capitulate.

European gas markets are particularly sensitive to developments around the Middle East because the conflict has kept traffic through the Strait of Hormuz severely disrupted. Qatari LNG deliveries to Europe have also been delayed, creating additional uncertainty for buyers.

Winter supply concerns grow

The supply risks come as unusually strong summer cooling demand has increased gas consumption across Europe. This has slowed the rebuilding of underground storage reserves at a time when governments and energy companies are seeking to prepare for the winter heating season.

The combination of tighter LNG availability, disruption around a major global energy route and stronger seasonal demand has increased scrutiny of European gas inventories. A prolonged disruption could leave European markets facing a narrower supply cushion as winter approaches.