Sibel Morrow
26 July 2022•Update: 26 July 2022
ANKARA
Oil prices increased on Tuesday as the Russia-Ukraine war continues to threaten supplies to overshadow demand concerns from the global economic recession.
International benchmark Brent crude was trading at $101.97 per barrel at 10.05 a.m. local time (0705 GMT) for a 1.77% increase after the previous session closed at $100.19 a barrel.
American benchmark West Texas Intermediate (WTI) was at $98.30 per barrel at the same time for a 1.65% gain after the previous session closed at $96.70 a barrel.
Prices came under supply pressure after Russian energy giant Gazprom said it would once again drastically cut gas supplies to the EU through its main pipeline due to maintenance work.
Gazprom said stopping another turbine at the Nord Stream 1 pipeline would halve the current daily gas production to 20%.
Natural gas flow from Moscow to Europe has decreased to the lowest levels in the past four years, below 100 million cubic meters since the beginning of July compared to quantities ranging between 400 and 500 million cubic meters per day.
According to data from the International Energy Agency (IEA) and Ukraine transmission system operator, Europe imported 155 billion cubic meters of natural gas from Russia, corresponding to about 40% of the continent’s natural gas consumption last year.
With the start of the Russian attacks in Ukraine on Feb. 24, the decline in the natural gas flow from Russia to European countries accelerated and fell to 200 million cubic meters at the end of May.
This flow dropped to 100 million cubic meters at the beginning of July, marking an 80% plummet relative to the record highs of 500 million cubic meters.
However, following the latest maintenance on the pipeline and subsequent issues with its restart, uncertainty has been raised around future gas flows into Europe and possible gas-to-oil switch of some consumers to further put oil prices under pressure.
“European Union members are meeting this week to discuss the energy crisis, with plans to reduce flows to certain consumers on the table,” Australia and New Zealand Banking Group (ANZ) commodity strategist Daniel Hynes said in an e-mail.
