March 7 (Reuters) - British and Dutch gas prices hit new record highs on Monday after Washington at the weekend said the United States and European allies are exploring banning imports of Russian oil.
The British day-ahead gas price rose 132 pence, or 28.2% to 600 penne per therm by 1028 GMT. It earlier hit a record high of 625 pence/therm.
The contract for immediate delivery jumped 260 pence, or 53.1% to a record high of 750 p/therm.
The benchmark Dutch front month contract was up 55.40 euros, or 27% to 260.40 euros per megawatt hour (MWh). It earlier hit a new record high at 335 euros/MWh.
The Dutch contract for May delivery also hit a record high at 263.70 euros/MWh earlier in the session.
Traders said expectations that the war in Ukraine could be long-drawn out has left the market extremely volatile.
"Also the fact that the United States could start an embargo on energy even if its alone is spooking the energy markets," a European gas trader said.
U.S. Secretary of State Antony Blinken said on Sunday The United States and European allies are exploring banning imports of Russian oil.
The news sent oil prices to record highs, with Brent hitting $139 a barrel, its highest level since July 2008.
Analysts an Engie's EnergyScan said that Monday's gas price levels "cannot be explained by any known fundamental price"
"In a world of scarcity, they reflect the panic buying of physical players who have to cover their short-term needs," they added.
Engie chief executive Catherine MacGregor said on Monday that any decision to stop Russian energy imports in retaliation for Russia's invasion of Ukraine would impact the energy supplies of France and Europe next winter.
Analysts at Refinitiv said that slower LNG arrivals is another bullish factor with only five cargoes en route to UK terminals and Dragon terminal is almost empty.
Britain last week blocked its ports to Russian-associated vessels and the EU is also considering banning Russian ships from ports, but vessels carrying Russian LNG are still headed to northwest Europe.
In carbon markets, the European Union benchmark carbon price was down 7.10 euros, or 10.9%, at 58 euros a tonne.