Germany, Poland suspend oil imports via Russian pipeline amid contamination worries

KEY POINTS

  • The sudden suspension of imports from the Soviet-built Druzhba pipeline, which runs from Russia via Belarus to central Europe, risks starving major European refineries of their major source of crude.
  • Energy market analysts said the incident represents an important supply risk, hence why oil prices were bubbling higher on Thursday.
  • International benchmark Brent crude traded at around $75.47 during morning deals, up over 1.2%, while U.S. West Texas Intermediate (WTI) stood at $66.20, around 0.5% higher.

Germany and Poland have suspended imports of Russian oil amid contamination concerns, prompting a rare crisis over supply from the world’s second-largest exporter.

The sudden suspension of imports from the Soviet-built Druzhba pipeline, which runs from Russia via Belarus to central Europe, risks starving major European refineries of their major source of crude.

German plants belonging to Total, Shell, Eni and Rosneft as well as refineries belonging to Poland’s PKN Orlen and Grupa Lotos were all reportedly at risk.

The Druzhba pipeline can ship up to 1 million barrels per day (bpd), according to data sourced by Reuters — approximately 1% of global demand.

“The first thing to note is that this incident involving contaminated Russian oil is rare occurrence,” Stephen Brennock, oil analyst at PVM Oil Associates, told CNBC via email on Thursday.

In fact, Brennock said it is the “first time I have seen anything like it.”

High-level Russian government officials were set to meet on Thursday to discuss how to resolve the contaminated crude.

CLICK HERE TO READ MORE

Please follow and like us:

Leave a Reply

Your email address will not be published. Required fields are marked *