Oil trades above $80 a barrel, hitting a 7-year high

U.S. oil prices hit a seven-year high Monday, marking an increase of more than 120 percent from just under a year ago.

On Monday morning, American crude prices increased 2 percent to hit $81.50 a barrel, dropping slightly to $81.15 by midday before closing at $80.49, the first time since October 2014 that U.S. crude closed at more than $80 a barrel.

An international natural-gas shortage could soon extend to the oil market, according to The Wall Street Journal. American natural-gas futures reached $6.31 per million British thermal units last Tuesday, the highest in nearly 13 years, and the shortage has affected households across Europe. If the shortage persists as temperatures turn colder, some power plants may rely on oil to make up for the shortfall, boosting the demand for crude oil.

Shortly after taking office, President Biden signed a temporary freeze on leasing for new oil and gas drilling on federal lands, but over the summer a federal court placed a temporary injunction on the order. The administration is appealing the decision but has resumed leasing during the appeals process. The Energy Information Administration said in March that the pause would likely not affect production until 2022.

Energy Secretary Jennifer Granholm said at a Financial Times conference that the administration is considering further releases of oil from the Strategic Petroleum Reserves, according to the Journal, while earlier this year Biden called on the Organization of Petroleum-Exporting Countries to step up production. OPEC announced in August that it would begin a series of coordinated supply increases in August, upping production by 400,000 barrels a day each month thereafter.

In response to the European crunch, Russian President Vladimir Putin has suggested increasing the supply of natural gas from Russia to Europe could ease the shortage. Russia recently put finishing touches on the Nord Stream 2 pipeline, a joint arrangement with German entities. The completion came after the U.S. eased sanctions on people and companies involved in its construction, arguing it could not prevent the pipeline’s construction without imposing sanctions on German officials as well.

Updated at 3:31 p.m.