World oil prices vaulted on Monday to fresh multi-year pinnacles on strong demand and tight supplies, sparking inflation woes and weighing on most European stock markets.

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.

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.”

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.”

We have never experienced a situation like this before on such a scale... (whereby) natural gas prices equal twice the price of oil- SEB analyst Bjarne Schieldrop

Surging oil prices meanwhile lifted London’s stock market on Monday due to its big-hitting energy sector. On the downside, Frankfurt and Paris 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.