Oil prices rise due to the threat of energy rationing in Europe

View of the Kozmino oil terminal on the shore of the Nakhodka Bay near the port city of Nakhodka, Russia, August 12, 2022. REUTERS/Tatiana Meel

September 7 (Reuters) – Oil prices rose on Thursday, offsetting some sharp losses in the previous session, as the possibility of an energy showdown between Europe and Russia overshadowed fears of a recession and rising inflation.

Brent futures rose 25 cents, or 0.3%, to $88.25 a barrel by 00:33 GMT after closing at the lowest level since early February in the previous session. U.S. oil futures rose 40 cents, or 0.5%, to $82.52 a barrel.

Prices have received some support from Russian President Vladimir Putin, who has threatened to halt oil and gas exports from the country if European buyers impose cap prices. read more

The European Union has proposed capping Russian gas prices for only a few hours, raising the risk of gas rationing in some of the world’s richest countries this winter if Moscow follows through on its threat. Russian Gazprom has already suspended gas flows from the Nord Stream 1 gas pipeline, interrupting a significant part of supplies to Europe.

Reacting to skyrocketing energy prices, new British Prime Minister Liz Truss will lift the country’s ban on hydraulic fracturing on Thursday and seek to make more efficient use of its North Sea reserves, The Telegraph reported earlier today. read more

The British government is expected to announce dozens of new oil and gas exploration licenses in the North Sea to boost domestic production, two sources familiar with the government’s discussions told Reuters.

Meanwhile, a number of central banks are expected to launch another round of rate hikes to fight inflation.

The European Central Bank is expected to sharply raise interest rates at its meeting on Thursday. The meeting of the US Federal Reserve System will take place on September 21.

Reporting by Laura Sanicola; Editing by Kenneth Maxwell

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