Oil rises over $1 a barrel as Russian pipeline halt revives supply fears


By Alex Lawler


LONDON (Reuters) – Oil rose over $1 a barrel on Tuesday, reversing an earlier decline, after said oil exports to via the southern leg of the Druzhba pipeline had been suspended since early August, reviving concern about tight supply.


Russian pipeline monopoly Transneft said had suspended oil flows via the pipeline leg because Western sanctions had prevented a payment from Moscow for transit fees from going through.


“Not that we need it at this point but it’s another reminder of how tight the market is and how sensitive the price is to supply disruptions, particularly those from Russia,” said Craig Erlam of brokerage OANDA.


Brent crude was up $1.28, or 1.3%, to $97.93 a barrel at 1136 GMT, after earlier falling as low as $94.90. U.S. West Texas Intermediate (WTI) crude gained $1.18, or 1.3%, to $91.94.


The Druzhba development comes as supply worries had been abating amid growing concern about a recession. Earlier, oil was under pressure from progress in talks to revive the Iran nuclear accord, which would allow higher Iranian oil exports.


Tamas Varga of oil broker PVM said the pipeline halt and general scepticism surrounding the Iranian nuclear deal had likely prompted the rally. “Having said that, the suspension should really have a short-term impact, in my view,” he said.


The European Union on Monday put forward a “final” text to revive the 2015 deal. A senior EU official said a final decision on the proposal, which needs U.S. and Iranian approval, was expected within “very, very few weeks”.


Talks have dragged on for months without a deal. Still, Iran’s crude exports, according to tanker trackers, are at least 1 million barrels per day below their rate in 2018 when then U.S. President Donald Trump exited the nuclear agreement, so an agreement could allow a sizeable boost in supply.


Oil soared earlier in the year as Russia’s invasion of added to supply concerns, with Brent hitting $139 in March, close to its all-time high.


Brent fell as low as $92.78 on Friday, its lowest since February, as the Bank of England’s warning on Thursday of a drawn-out downturn intensified fears of slowing fuel use.


Coming into view is the latest round of weekly U.S. oil supply reports, firstly from the American Petroleum Institute at 2030 GMT. Analysts expect a small 400,000-barrel drop in crude inventories. [EIA/S]


 


(Additional reporting by Sonali Paul and Emily Chow; Editing by Louise Heavens and Mark Potter)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor



Source link

Recent Posts

Scan to Download
ios&Android APP

Open trading account and start trading!

Join our happy customers