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Russian crude flows through Ukraine to Hungary, Slovakia and the Czech Republic were halted last week after sanctions prevented payment of the transit fee, according to Russia’s pipeline operator Transneft PJSC.
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(Bloomberg) — Russian crude flows through Ukraine to Hungary, Slovakia and the Czech Republic were halted last week after sanctions prevented payment of the transit fee, according to Russia’s pipeline operator Transneft PJSC.
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Oil erased earlier losses on the news, rising 1.1% to $97.73 a barrel as of 11:58 a.m. in London. Russia has already blamed international sanctions for curbing flows of natural gas to Europe through the Nord Stream pipeline. Similar disruption to oil flows could deepen the region’s energy crisis.
Ukrtransnafta, which operates Ukraine’s oil pipeline network and transits crude via the southern leg of the Druzhba link, halted Russian crude deliveries on Aug. 4, Transneft said in a statement on Tuesday. Flows through the northern leg of the link, which runs through Belarus to Poland and Germany, are unaffected, it said.
There was no immediate comment from Ukrtransnafta.
The contract between Transneft and Ukrtransnafta envisions 100% prepayment for transit flows. While the Russian pipeline operator paid the August transit fee on July 22, it received the money back on July 28, Transneft said. The European banks are not authorized to make their own decisions on cross-border payments from Russia and need approvals from national regulators, according to Transneft.
Transneft is working on alternative options to transfer the funds, according to the statement.
(Updates with oil price in second paragraph)
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Image and article originally from financialpost.com. Read the original article here.