Oil gains for a second day on supply concerns

News Desk
Wednesday, Jul 27, 2022

LONDON: Oil prices rose on Tuesday for a second day on growing concerns about tightening European supply after Russia, a key energy supplier to the region, cut gas supply through a major pipeline.

Brent crude futures rose $1.25, or 1.2pc, to $106.40 a barrel, extending the previous day's 1.9pc gain.

U.S. West Texas Intermediate (WTI) crude futures were up 98 cents, or 1pc, at $97.68 after climbing by 2.1pc on Monday.

Russia tightened its gas squeeze on Europe on Monday as Gazprom said supplies through the Nord Stream 1 pipeline to Germany would drop to only 20pc of capacity.

The cut in supplies will leave countries unable to meet their goals to refill natural gas storage ahead of the winter. Germany, Europe's biggest economy, may have to ration gas to industry to keep its citizens warm during the winter months.

"The announcement revived fears that Russia, despite its cynical denial, will not shy away from using its energy as a weapon in order to gain concessions in its war against Ukraine and ... could probably expect short-term success," said Tamas Varga at oil brokerage PVM.

The European Union has repeatedly accused Russia of resorting to energy blackmail, while the Kremlin says shortfalls have been caused by maintenance issues and Western sanctions.