On a day marked by sharp gains across the European natural gas market, the European carbon market also moved higher. EU carbon allowances traded as high as €84.43 during Monday’s session before easing slightly to close at €83.80, marking their highest closing level in a month and reflecting broader strength across European energy markets.

Trading activity also picked up significantly during the session, with 18.42 million allowances changing hands, around 17.3% above the monthly average of 15.7 million allowances, pointing to increased trading interest alongside the sharp upward movement in carbon prices.

“The market is not in any way as volatile as fuels and power, but the continuous increases on the gas market appear to be enough to drive carbon up as well,” according to Mind Energy this morning.

Amid growing concerns over the security of energy supplies from the Middle East, European natural gas prices jumped almost 4% on Monday, reaching their highest level since March this year, following new US measures aimed at further limiting Iran’s access to the global financial system.

The upward momentum continued into Tuesday morning, with EUAs trading close to Monday’s intraday high, while front-month TTF gas prices climbed to a fresh high, renewing the historically strong correlation between European carbon and natural gas markets.