• Natural gas is the most important area to watch in energy markets right now, a top RBC strategist told CNBC. 
  • Moscow's cuts in gas flows to Europe have sent prices soaring to records, as the region's energy crisis worsens.
  • "We have to fully expect that Russia is going for a mutually assured destruction strategy with Europe," Helima Croft said.

Investors should keep a close eye on natural gas, as prices break records and Moscow sticks to its strategy of "mutually assured destruction" with Europe, a top Royal Bank of Canada strategist has said.

"I think natgas is the most important story to be watching right now in this market. Look what is happening — where we just keep breaking previous highs," Helima Croft, RBC's head of global commodity strategy, told CNBC on Monday.

On Tuesday, Dutch TTF natural gas futures were up almost 13% at 276 euros ($274) per megawatt hour, after reaching a record high of 291 euros the previous day, on worries about Gazprom's pause of Nord Stream 1 gas flows to Germany.

European natural gas prices have soared as the region's energy crisis has intensified, with Moscow's cuts in flows driving the gains. Countries are now scrambling to get cut usage and build inventory for the winter ahead.

Even before the recent Nord Stream 1 news, Gazprom slashed gas supply to Europe via the pipeline to just 20% of capacity.

"We have to fully expect that Russia is going for a mutually assured destruction strategy with Europe," Croft said. "'You impose the sanctions on us on December 5, and you continue to support Ukraine, and we are going to make this absolutely awful for you.'"

European officials have accused Moscow of weaponizing its energy exports as payback for Western sanctions imposed after Russia invaded Ukraine. The EU's ban on seaborne imports of Russian crude oil — the vast majority of the supply — comes into force on Dec. 5.

Countries in the region face what one analyst calls a "scary" energy crisis. Germany's leading utility has been forced to restart a mothballed coal-fueled power plant to secure electricity supply, a sign of how stretched European gas supply is. 

"Europe is facing an economic nightmare right now," Croft said.

"And the question is — look at where natural gas prices are. Look at what's going to happen in terms of industrial shut-ins and rationing. Is Europe going to go forward with these sanctions? That, to me, is the wild card."

Read the original article on Business Insider