Oil prices rose for the second day in a row amid growing concerns about limited supplies to Europe after Russia, a major supplier of oil and natural gas to the region, cut off gas supplies via a trunk pipeline.
September futures for Brent crude rose $1.51, or 1.4%, to $106.66 a barrel after rising 1.9% the day before.
September contracts for US West Texas Intermediate oil also rose $1.36, or 1.4%, to $98.04 a barrel after rising 2.1% on Monday.
Russia cut off gas supplies to Europe on Monday after Gazprom said supplies via the Nord Stream 1 gas pipeline to Germany would be cut to 20% of its capacity.
Reduced supplies from Russia will deprive countries of the opportunity to reach their goals of replenishing natural gas reserves before the winter demand period. Germany, Europe’s largest economy, faces the prospect of gas rationing for industry to keep its citizens warm during the winter months.
This may encourage end users to exchange gas for oil products, especially diesel fuel. But it also comes with risks, as Russia supplies the region with most of its diesel fuel, and prices are expected to rise for drivers who rely on the fuel.
Source: El Iktisad
