Text by wsj journalist Joe Wallace

Natural gas prices soared to record levels in Europe as intensifying fighting in Ukraine threatened to reduce supplies of Russia's heating and power generation fuel.

Russian gas continues to flow through Ukraine in large quantities to consumers in Europe. However, investors fear that these supplies could be disrupted as Russia intensifies its confrontations, and that Russian gas supplied through other pipelines could be affected by Western sanctions against Moscow. Alternatives such as liquefied natural gas from the U.S. would strive to fill the remaining gap if Russian exports were abolished, and would incur enormous expense as Europe competes with other gas-consuming regions for limited supplies.

These concerns have led to gas futures contracts on the northeastern European market rising 42% from around 270 euros on Friday, equivalent to $293, or one megawatt-hour on Monday. Earlier in the session, prices reached an all-time high of 345 euros.

Before Friday, prices had never exceeded 200 euros, according to FactSet data going back to 2013. Before last year, they had never exceeded €30.

Rising prices for a fuel widely used to heat homes and generate electricity threaten to cause economic disruption in Europe, where massive energy-consuming industries, including fertilizer and metals producers, had already cut production by 2021, when prices were well below the Monday level at which gas was traded. The increase is likely to cause difficulties for the European Central Bank, which has taken a more cautious approach to raising interest rates than the Federal Reserve and the Bank of England in the face of rising inflation.

The prospect of rapidly rising energy prices in Europe, which receives about 40% of its gas supplies from Russia, has led the European Union and the U.S. to refrain from including oil and gas in their initial rounds of sanctions. The U.S., however, said this weekend it was working on plans for a Russian oil embargo with its allies.