London Brent oil jumped to a three-year high at $84.38 per barrel, while New York’s WTI crude leapt to a seven-year peak $81.72, though both eased lower later in the day.
The recent decision by OPEC and other major producers not to ramp up output has further strained global supplies.
“Nerves are still clearly apparent in the markets,” OANDA analyst Craig Erlam told AFP.
“The energy crisis is a major concern in the coming months, while inflation concerns and the prospect of tighter monetary policy are among the numerous economic headwinds.”
Stock markets in Paris and Frankfurt were down, but London’s FTSE 100 — home to energy giants — was up in afternoon trading. Wall Street was higher in morning trading after a mixed opening.
Energy crisis: Oil was also boosted last week by record-breaking natural gas prices, but these have eased after recent comments from Russian President Vladimir Putin.
Gas had spiked last week on rebounding demand from reopening economies ahead of the peak-demand northern hemisphere winter.
That has persuaded some consumers to switch from gas to crude oil.
“Extremely high natural gas prices … (are) likely to add demand for oil products in substitution for expensive natural gas,” noted SEB analyst Bjarne Schieldrop.
“But we have never experienced a situation like this before on such a scale … (whereby) natural gas prices equal twice the price of oil.”
Surging oil prices lifted London’s stock market due to its big-hitting energy sector.
On the downside, Frankfurt’s DAX and the Paris CAC 40 fell as inflation fears festered in early afternoon deals.
“European markets are on an uncertain footing,” noted IG analyst Joshua Mahony.
“With inflation fears continuing to loom, we are unlikely to see a return to the rampant bullish optimism soon,” he noted.
Elsewhere, most Asian markets rose Monday to extend last week’s rally after US lawmakers averted a painful debt default.
Fed tapering: The latest oil spike compounded inflation concerns as the Federal Reserve prepares to taper its ultra-loose monetary policy.
A big miss on US jobs creation last month did little to change expectations that the Fed will start winding back its massive bond-buying programme as it looks to keep a cap on price rises just as the global recovery shows signs of slowing.
Attention will be on the release of inflation data out of China and the United States this week, with the surge in prices across the world becoming increasingly problematic for governments as economies reopen and demand for goods returns with supplies limited.
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