Yep, that was blood.
Even small oxygen tanks like those are extremely dangerous. I don't know how many calls I've been on with the fire department where a fire was caused by somebody smoking while on oxygen. On one, a lady was smoking with her nasal canula flowing oxygen. Apparently she had the regulator turned WAY up and the room had an excess of oxygen in the atmosphere. When the oxygen ignited it lifted the entire roof of a quad-plex apartment off the wall and displaced it a few inches, blowing out all the windows in all four units at the same time. It also burned the carpet out of the entire living room and singed the paint on the walls. She survived with a few small 3rd degree burns on her face and hands and 2nd degree burns over a large part of her body, arms, and legs. She was really lucky the cylinder didn't explode, this was just the flash fire from the oxygen.
This was her SECOND fire caused by smoking with oxygen. She was asked to find another apartment after this one.