European natural gas prices surged to €40 per megawatt-hour as tensions in the Middle East generated a fresh wave of market volatility.

Benchmark futures settled 2.1% higher on Monday, following gains for oil and offsetting Friday’s losses. Markets are bracing for a possible escalation in hostilities between Israel and Iran that could spark a wider regional conflict, potentially affecting supplies of the heating fuel.

A Hezbollah drone exploded near Israeli Prime Minister Benjamin Netanyahu’s private home on Saturday, and Israel launched a fresh military assault on Hezbollah strongholds in Lebanon the following day. Israel has already vowed to retaliate against Iran for a missile attack at the start of October.

Geopolitical concerns have kept prices volatile in recent weeks, highlighting the vulnerability of Europe’s fuel supplies as the region’s heating season gets under way. For gas markets in particular, a key concern lies around the risk of a closing of the Strait of Hormuz, the gateway to the Persian Gulf and an important waterway for liquefied natural gas and oil shipments.

Chevron Corp., the operator of Israel’s Leviathan and Tamar offshore projects, said on Monday that their facilities in the country are working as normal. “We are supplying natural gas to our customers in Israel and the region from both the Leviathan and Tamar reservoirs,” spokesperson Sally Jones said.

“Expectations of an Israeli response to the 1st October attack are still hanging over markets, which is amplifying the already tight winter outlook for European gas markets,” said Florence Schmit, a European energy strategist at Rabobank. “This is keeping the Dutch benchmark gas market in the €39-€40 a megawatt-hour range until we can get a clear sense of where geopolitics will drive prices.”

In addition, a cold snap is expected to take hold of the region at the end of the month, testing the region’s energy infrastructure and its storage facilities. London, Paris and Berlin are set to see temperatures drop below seasonal norms next week, according to a Bloomberg model of weather forecasts.

For now, Europe appears well supplied, with more LNG deliveries landing on its shores this month. Pipeline flows from Norway have also rebounded.

Dutch front-month futures, Europe’s gas benchmark, settled at €40.02 a megawatt-hour.