What a difference a month makes. European equities were looking poised to keep up the good momentum since the summer last year but that trajectory has completely changed now amid the US-Iran war. The developments in the Middle East has flipped the script in Europe, with surging energy prices being the main issue.European gas futures surged by over 115% at the highs but look to settle closer to being up 70% on the month now. Dutch TTF gas futures are hovering closer to €54 and that is keeping broader market sentiment in the region on edge still.The surge higher isn't as dramatic as what we saw with the Russia-Ukraine conflict in 2021-22 at least. But if the Middle East conflict drags on for much longer, the risk will continue to rise day by day. That especially if Iran continues to go unchecked in disrupting key energy facilities in the Gulf region.So far today, stocks in general are seeing a calmer mood in looking to round off March trading. However, that belies what has been a terrible month for European indices. And if not for a bit part recovery in the past week, it definitely would be the worst month for regional stocks since the Covid pandemic.In fact, it still is for some. Here's a snapshot of the overall picture this month as we count down to the end of March trading:Stoxx 50 -9.2% (worst month since March 2020)Stoxx 600 -7.7% (worst month since June 2022)Germany DAX -10.1% (worst month since June 2022)France CAC 40 -8.9% (worst month since March 2020)Spain IBEX -6.8% (worst month since June 2022)Italy FTSE MIB -6.6% (worst month since June 2022)If not for being the worst month since the Covid pandemic, the rout in March this year is comparable to the energy crisis in 2022 which peaked in June as euro area bond spreads widened drastically amid recession and inflation fears.And with the war still raging on, the outlook remains very cloudy and uncertain still. That as market expectations for the ECB has also flipped to needing to price in interest rate hikes. There's a heated debate of that coming in April, and there are also mounting concerns about the ECB raising interest rates into declining economic conditions and rising credit risks.That is not the kind of backdrop you'd wish to see if you're an investor. So, therein lies the risks especially if the Middle East conflict drags on for longer with the current setting and status quo being extended. This article was written by Justin Low at investinglive.com.