Oil prices rose after supplies stopped via a Russian pipeline

8/9/2022 7:36:01 PM
 Customers fill up at a UGas gas station, Monday, July 18, 2022, in Opa-Locka, Florida.
 photo: AP/Marta Lavandier
Oil prices rose more than $1 on Tuesday, falling earlier, after Russia said that oil exports to Europe through the southern part of the Druzhba pipeline had been suspended since early August, reviving concerns about a supply shortage.

Russia's pipeline monopoly Transneft said Ukraine had suspended oil flow through the pipeline because Western sanctions had prevented Moscow from paying transit fees.

"We don't need that at this point, but it's another reminder of how tight the market is and how sensitive the price is to supply disruptions, particularly from Russia," said Craig Erlam of brokerage Oanda.

Brent crude rose $1.42, or 1.5 percent, to $98.07 a barrel at 11:13 GMT, falling to $94.90. US West Texas Intermediate crude also rose $1.01, or 1.1%, to $91.77.

This development related to Druzhba's pipeline comes when supply concerns have been waning amid growing concern about a recession. Earlier, oil came under pressure in connection with talks to revive the Iran nuclear deal that would increase Iranian oil exports.

Oil prices rose earlier in the year after Russia's invasion of Ukraine heightened supply concerns, sending Brent crude to $139 in March, close to an all-time high.

In a related context, Energy Aspects said on Monday that crude oil might continue to weaken before rising in the winter as the United States works to reduce withdrawals from strategic stocks and the European Union's ban on Russian supplies takes effect, Bloomberg reported.

This week's slew of data may give more direction to the market, as the US Energy Information Department is due to release its short-term forecast later on Tuesday. 

The Organization of the Petroleum Exporting Countries and the International Energy Agency will also release their monthly reports on Thursday.

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