Oil prices extend multi-year highs as energy crisis grips major economies

Global prices for crude oil saw another surge on Monday, extending seven-year highs as the energy crunch affecting major economies shows no signs of easing amid the post-pandemic recovery.

International benchmark Brent grew by 1.4% to $83.79 per barrel by 8:24am GMT after gaining about 4% last week. US crude benchmark West Texas Intermediate (WTI) was up 1.76% to $81.11 per barrel, its highest price since late 2014.

Crude prices have soared amid a major pick-up in economic activity across nations that managed to boost Covid vaccinations to lift lockdowns. Meanwhile, supplies from major producers have been restrained, pushing prices even higher.

At the same time, the global economic recovery provoked an enormous increase in prices for coal and gas.

Coal shortages caused electricity blackouts in several states in India. Chinese coal miners were reportedly ordered to ramp up production as power prices keep soaring.

As rising coal prices make oil more attractive as a fuel for power generation, the surge in demand is pushing crude prices higher.

“There’s no direct news flow, the moves are momentum-driven where intermarket factors implying higher expected inflation are supporting the bullish move in oil prices,” Kelvin Wong, commodities analyst at CMC Markets in Singapore, told Reuters.

Last week, US drillers added five new oil wells in an attempt to take advantage of the growth in prices, marking the fifth straight weekly increase in oil and gas rigs.

At the same time, the Organization of the Petroleum Exporting Countries (OPEC) and allied producers led by Russia turned to a steady and gradual increase of output.

For more stories on economy & finance visit RT's business section