Crude oil prices rise as Russia suspends exports to Europe through pipeline
The suspension of crude oil flow through the Druzhba pipeline cuts off Hungary, Slovakia and the Czech Republic.
Russia announced it is suspending crude oil exports through its Druzhba pipeline, leading to price increases.
The move cuts off the flow of oil to Hungary, Slovakia, and the Czech Republic. Russian pipeline operator Transneft blamed the situation on its counterpart in Ukraine, telling Russian state-owned news agency RIA Novosti that the Ukrainian company stopped the oil transport because of a problem with Russia's ability to pay.
Insider reported that Russia's failure to pay was a result of Western sanctions., and that a Transneft spokesperson said the pipeline's northern section will continue to function normally. That section of the pipeline provides oil to Poland and Germany via Belarus.
Soon after the announcement that the Ukrainian part of the pipeline would be halted, crude oil prices jumped, with Brent crude increasing 1.36% to nearly $98 a barrel, Insider reported. WTI crude went up 1.22%, reaching almost $92 a barrel.
UKRAINE TO DOUBLE ENERGY EXPORTS AMID RUSSIAN GAS CUTS TO EUROPE
Pipes reading 'working pipeline' are seen at a line production station on a Druzhba pipeline in Brody, some 460 km (286 miles) west of Kiev January 10, 2007. The station is located on a pipeline that is part of the Druzhba pipeline system taking Russ (Reuters / Reuters)
The situation arose just two over weeks after Russian state-owned energy company Gazprom cut natural gas flow to Germany, reducing supplies through the Nord Stream 1 pipeline to just 20%.
The pipeline had reopened at 40% capacity a week earlier after being down for 10 days for scheduled maintenance. Gazprom blamed that situation on sanctions that held up the return of a turbine that had been sent to Canada for repairs in June.
A fuel tank truck drives past a signboard, which reads "Druzhba oil pipeline," near the city of Samara, Russia July 23, 2019. REUTERS/Staff/File Photo (Reuters / Reuters)
UKRAINE TAPS EUROPEAN ENERGY MARKET AS KYIV BEGINS EXPORTING ELECTRICITY
Europe is heavily reliant on Russian energy, importing about 40% of its gas and 30% of its oil from Russia.
The receiver station of the Druzhba oil pipeline between Hungary and Russia is seen at the Hungarian MOL Group's Danube Refinery in Szazhalombatta, Hungary, May 18, 2022. REUTERS/Bernadett Szabo/File Photo (Reuters / Reuters)
CLICK HERE TO GET THE FOX BUSINESS APP
Meanwhile, Ukraine is looking to increase its energy exports to Europe. In July the country began supplying Slovakia, and Hungary and Moldova are expected to follow.
Fox Business's Paul Best and Caitlin McFall contributed to this report.