By Adedapo Adesanya
Crude oil prices edged higher by about 1 per cent on Thursday after Russia threatened to halt the exports of the commodity to some buyers.
Brent futures rose $1.15 or 1.3 per cent to settle at $89.15 a barrel, while the United States West Texas Intermediate (WTI) crude rose by $1.60 or 2.0 per cent to settle at $83.54 per barrel.
The European Union (EU) had proposed a price cap on Russian gas leading President Vladimir Putin to threaten to cut off all energy supplies if that proposal goes through, raising the risk of rationing in some of the world’s richest countries this winter.
The EU, however, plans to press ahead with the price cap on Russian gas and also a ceiling on the price paid for electricity from generators that do not run on gas.
EU energy ministers are due to hold an emergency meeting on Friday.
“We will propose a price cap on Russian gas… We must cut Russia’s revenues which Putin uses to finance this atrocious war in Ukraine,” European Commission President Ursula von der Leyen said.
The escalating standoff could drive up sky-high European gas prices further, adding to already skyrocketing bills EU governments are paying to stop their energy providers from collapsing and prevent cash-strapped customers from freezing in the cold months ahead.
The price increase came despite a surprise build in US crude inventories. News that the United States was weighing the need for more crude releases from strategic reserves, and concerns China’s COVID-19 lockdown extensions and rising global interest rates would slow economic activity and hit fuel demand.
The US Energy Information Administration (EIA) reported inventories had added 8.8 million barrels for the week to September 2 compared with an inventory draw of 3.3 million barrels estimated for the previous week.
The build was due to a combination of increased imports and ongoing releases from government emergency reserves, the EIA said.
The hefty build compares with the 250,000-barrel draw analysts forecasts and data from American Petroleum Institute (API) industry group showing a 3.6 million barrel increase.
Concerns about the health of the global economy and expectations of falling fuel demand led to sharp oil price falls in the previous session.
China’s Chengdu extended a lockdown for a majority of its more than 21 million residents to prevent further transmission of COVID-19.
The European Central Bank (ECB) also raised its key interest rates by an unprecedented 75 basis points and signalled further hikes, prioritising the fight against inflation even as the bloc’s economy is heading for a likely winter recession.
Dipo Olowookere