By Geoffrey Smith
Investing.com — Crude oil prices rose on Tuesday after Russia’s state pipeline operator said it had stopped shipping oil through a key export link, blaming European sanctions on the country.
Transneft (MCX:) said it had stopped shipments through the southern branch of the Druzhba pipeline, which passes through Ukraine to feed Hungary, Czechia, and Slovakia, as of August 4, according to the news agency Interfax. It said the payment it had sent to its Ukrainian counterpart Ukrtransnafta had been refused due to complications with EU sanctions, and that Ukrtransnafta had subsequently stopped shipping due to non-payment.
futures rose 1.4% to $97.94 a barrel in response to the news. That’s their highest in nearly a week. futures meanwhile rose 1.3% to $91.92 a barrel, on fears that the development may signal a new stage in the economic conflict between Russia and Europe. While the EU intends to phase out imports of Russian oil and refined fuel by the year-end, it had carved out exceptions for those – such as the central European trio – who are particularly dependent on Russian supplies owing to being landlocked.
The development echoes Russia’s action in cutting gas flows to Germany, Europe’s largest energy consumer, less than two months ago – a move that gas monopoly Gazprom (MCX:) also blamed on sanctions.