Crude Prices Jump 1% as Russia Plans to Cut Gas Supply To Europe

Crude oil prices rose more than 1 percent after Russian energy giant Gazprom announced plans to drastically cut gas supplies to Europe.

The move by the Russian state-controlled company is looking to reduce gas supplies through the Nord Stream 1 pipeline to Germany to just 20 percent capacity.

On the Intercontinental Exchange, the September contract of Brent was at 12,635.62 shillings per barrel, 1.24 percent higher from its previous close. The September contract of West Texas Intermediate (WTI) on NYMEX rose 1.27 percent to 11,624.29 shillings a barrel.

Traders now project that the move by Gazprom will lead European nations to switch to crude oil to meet their energy requirements.

According to market researchers, the rise in oil prices also comes on the back of a weak dollar and persistent supply risks relating to Russia.

“Western countries are planning to put a cap on Russian crude oil price while Russian natural gas supply to Europe remains challenging. However, weighing on crude price are demand concerns amid disappointing economic data, downbeat growth forecasts, and persisting virus concerns in China.

Crude may struggle for direction as growth worries counter supply risks; however, the general bias may remain weak if risk sentiment weakens again,” head of commodity research at Kotak Securities Ravindra Rao noted.

Since the war in Europe elapsed, Kenya has witnessed higher oil prices due to disruptions in the supply chain of the commodity and its products.

Since January, the prices of petrol and diesel have risen by over 22 percent and are currently at a record high, even with the fuel subsidy that has been catering for 30 shillings per liter of petrol.

In March, crude oil hit a 13-year high of USD130 in March amid increased demand which did not match supply.

Currently, in Nairobi, super petrol is retailing at Sh159.12 while diesel is 140 shillings, and kerosene is retailing at 127.94 shillings.

Meanwhile, the rapid rise in cooking oil prices has pushed the commodity to be one of the most expensive commodities in the country.

A liter of cooking oil is currently selling at as much as 436 shillings per liter in the local retail space.

Prices of detergent have also increased 19 percent according to KNBS, with a 500 grams product averaging 198.06, up from 165.59 shillings.

Related Content: Crude Oil Prices Jump 2% Due to Weak Dollar, Supply Concerns