The benchmark U.S. oil price jumped on Tuesday morning, hitting the highest level in seven years after OPEC+ decided to continue making only small monthly additions to oil supply.
As of 7:57 a.m. EDT on Tuesday, the U.S. oil price, WTI Crude, was up by 0.98% on the day at $78.41. This is the highest level since 2014, before prices crashed.
Brent Crude, the international benchmark, was also up to a multi-year high. After closing up 2.5 percent at $81.62 on Monday-the highest level since October 2018-Brent prices had risen above $82 on Tuesday morning and traded at $82.24, up 1.16%, at 7:57 a.m. EDT.
Monday's decision of the OPEC+ group to keep plans for easing the cuts unchanged-despite calls for more supply from consuming countries, including the United States-continued to drive the market on Tuesday.
"The lack of urgency alarmed traders who reacted by sending Brent to a three-year and WTI to a near seven-year high," Saxo Bank said in a Tuesday note.
"The risk of higher prices is real with demand destruction the next focus, but in the winter months ahead, this level could be substantially higher," the bank's strategy team said.
In addition, oil was caught again in the broader energy price rally, which saw record-high gas prices in Europe, yet again, and coal prices in Europe and Asia surging to multi-year highs.
Rallying gas prices are already boosting oil demand with gas-to-oil switch, especially in Asia, Amin Nasser, chief executive officer of Saudi oil giant Aramco said at the Energy Intelligence forum on Monday. Oil consumption has increased by around 500,000 barrels per day (bpd) since the natural gas crunch began, Nasser said, as carried by Bloomberg.
"There is some shift we have seen from gas to liquids, especially in certain markets in Asia," the executive noted.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More