Crude oil price trades close to $82 a barrel for new seven-year high

Russian President Vladimir Putin has blamed the transition to green energy and low investment in the extraction industries for what he said were "hysteria and some confusion" on European markets where energy prices are surging

At an Opec+ meeting of producers earlier this week, Saudi Arabia and its partners opted for only a modest output increase of 400,000 barrels a day for November, taking many analysts by surprise as a spike in natural gas prices looks set to inflame demand for oil products this winter.

Oil climbed from a seven-year high as traders assessed the decision of oil producers to keep supplies fairly tight even as the world grapples with a natural gas crisis.

Brent for December gained $1.68 to $82.94 a barrel on the ICE Futures Europe exchange, while futures in New York advanced as much as 2%, heading closer to the key, psychological level. 

At an Opec+ meeting of producers earlier this week, Saudi Arabia and its partners opted for only a modest output increase of 400,000 barrels a day for November, taking many analysts by surprise as a spike in natural gas prices looks set to inflame demand for oil products this winter.

“There is no room for error in the system,” said Phil Flynn, senior market analyst at Price Futures Group. 

“If we get a cold winter these prices could go up dramatically,” he said. 

Both the US and global crude benchmarks have surged this month with rising natural gas prices stoking fear of higher demand for crude for power generation.  Goldman Sachs sees the switch adding an extra 650,000 barrels a day to oil demand.

Various underlying oil market gauges are also showing signs of strength, including a trade favoured by hedge funds, the West Texas Intermediate crude.  Citigroup said the Opec+ coalition may end up meeting before November, as an ever-tighter market compels the producers to reconsider their strategy.

“They are going to meet again, eventually, if not before the month of November, to try to put more oil back in the market,” Ed Morse, the bank’s head of commodities research, said. 

“Almost every analyst on the planet has a different view from what the Opec secretariat has about demand growth in the next two months,” he said.

Meanwhile, Russian President Vladimir Putin blamed the transition to green energy and low investment in the extraction industries for what he said were "hysteria and some confusion" on European markets where energy prices are surging.

Russia, a major oil and gas exporter, is facing pressure to commit to a "net zero" emissions target ahead of the United Nations’ Climate Change Conference (COP26), which starts in Glasgow next month and is aimed at agreeing new policies to fight climate change.

Mr Putin has not yet said whether he will attend. He told a government meeting it was vital that the green transition happened smoothly and criticised what he described as "unbalanced decisions" and "drastic steps".

"You see what is happening in Europe. There is hysteria and some confusion in the markets. Why? Because no one is taking it seriously," he said.

"Some people are speculating on climate change issues, some people are underestimating some things, some are starting to cut back on investments in the extractive industries. There needs to be a smooth transition," he said.

He called for the sustainable development of the oil, gas and coal sectors and said it was important that was not neglected. 

Bloomberg and Reuters