After sliding to lows unseen since mid-January in the prior trading session, futures on US West Texas Intermediate Crude Oil rebounded over 0.3% on Thursday, as energy stalemate between the EU and Russia heightened investor concerns over fuel supply tightness.
Yesterday the EU proposed a price cap on Russian gas after President Vladimir Putin threatened to halt all oil and gas supplies in case the EU members took such a measure. This heightened the risk of rationing in some of the wealthiest countries globally during the winter.
The EU also proposed a ceiling on the price paid for electricity from generators not running on gas.
Russia’s gas supply via the Nord Stream 1 pipeline has already been halted, which cut off a considerable percentage of supply to Europe.
The energy standoff could push up already sky-high European gas prices even further and add to huge bills EU governments are paying to prevent their energy providers from collapse.
The EU has accused Russia of using energy supplies as a weapon of retaliation for Western sanctions imposed on Moscow over its incursion into Ukraine.
In turn, Moscow blames those sanctions for causing the energy supply disruptions, which it attributes to pipeline faults.
EU energy ministers are expected to conduct an emergency meeting tomorrow.
The oil market is being heavily affected by “various external forces such as the energy battle between Western countries and Russia,” Haitong Futures analysts wrote in an investor note.
The potential impact of any deal or reinstating an accord between the West and Iran on the Islamic country’s nuclear programme would also be significant, they said.
As of 8:58 GMT on Thursday WTI Crude Oil Futures were edging up 0.38% to trade at $82.25 per barrel. Yesterday the black liquid went down as low as $81.50 per barrel, which has been its weakest price level since January 13th ($81.39 per barrel).
At the same time, Brent Oil Futures were gaining 0.44% on the day to trade at $88.39 per barrel. Yesterday Brent Oil went down as low as $87.41 per barrel, which has been its weakest price level since January 25th ($86.20 per barrel).