• Monday, June 24, 2024
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Russia-Ukrainian conflict: Russia’s major pipeline halt sees crude prices soaring higher

Brent nears $125 as supply lags on improved demand

Oil exports from Russia’s crucial pipeline on the Black Sea coast were fully halted on Wednesday, pushing crude prices higher amid fears that Moscow would interrupt energy supplies just as US president Joe Biden arrived in Europe to discuss the war in Ukraine.

Brent crude, the international oil marker, rose by 5 per cent to more than $121 a barrel on Wednesday.

Financial Times reported that the Caspian Pipeline Consortium (CPC), the Moscow-headquartered group running a pipeline linking Kazakh oilfields with Russia’s Novorossiysk port, indicated on Wednesday that it was shutting down all three units used to load oil from the more-than-1,500km artery on to tankers, blaming storm damage.

The full closure comes as EU leaders prepare to discuss deeper sanctions on Moscow for its decision to invade Ukraine.

Read also: Global oil supplies further threatened as Russia chokes major oil pipeline

The full shutdown on Wednesday came less than a day after Moscow said it would partially shut the infrastructure to assess storm damage to the port’s single point moorings.

The latest move is estimated to halt the export of about 1.4mn barrels a day of oil, higher than the 1mn a day expected from the partial shutdown on Tuesday.

The CPC mainly ships oil produced in Kazakhstan by companies including Chevron and ExxonMobil, as well as some Russian crude from fields along the route. Chevron said earlier on Wednesday that exports from its Tengiz field continued uninterrupted.

According to the CPC, 213 of the 585 tankers loaded from the pipeline in 2021 went to Italy. Another 41 went to Spain, 39 to France and 26 to the US. The US import ban exempts oil produced in Kazakhstan, which accounts for roughly 90 per cent of the pipeline’s flows.