London: European natural gas prices surged nearly 4% on Monday, reaching their highest level since January 2023. The increase comes as the United States initiated a comprehensive campaign to isolate Iran from the global financial system, sparking concerns over potential disruptions to energy supplies originating from the Middle East.

According to Anadolu Agency, the September futures contract at the Dutch-based TTF, Europe's primary gas trading hub, increased approximately 4% to £68.45 ($79.85) per megawatt-hour. The rise in prices is attributed to the announcement by US Treasury Secretary Scott Bessent of Operation Economic Outcast, a campaign imposing sanctions on Iran's aviation, shipping, gold, technology, and digital asset sectors.

Bessent stated that the objective of these measures is to cut off all economic support to the Iranian regime, emphasizing that any entity involved in facilitating money laundering for Tehran would face permanent exclusion from the US dollar system. He also hinted that a significant financial institution might face sanctions by the end of the week.

These measures follow a warning from US President Donald Trump, declaring that Washington could impose sanctions on countries that continue trading with Tehran. In response, Iran dismissed these threats, labeling them as desperate attempts that would not succeed in forcing compliance.

The European gas market's vulnerability is underscored by ongoing tensions in the Middle East, which have kept the Strait of Hormuz mostly closed and delayed Qatari liquefied natural gas shipments to Europe. This disruption, coupled with increased cooling demand during a summer heatwave, has slowed the replenishment of European gas inventories. Consequently, there are growing concerns about whether Europe will have sufficient supply buffers as the winter heating season approaches.