Oil prices have been falling in Wednesday’s session after oil flows on the Druzhba pipeline from Russia to Eastern Europe resumed after having been temporarily suspended following repairs on electrical infrastructure damaged in Moscow’s latest assault on Ukraine.
Brent crude was trading down 2.11% at 11:50 a.m. EST, while WTI was down 2.83%.
The extent of the disruption is yet to be determined, but came concurrent with a big explosion in eastern Poland near the Ukrainian border that raised widespread alarm especially among NATO countries.
Hungary's oil and gas giant MOL says its Ukrainian partner told the company that the disruption was triggered after a Russian rocket hit a power station close to the Belarus border that provides electricity for a pump station. Slovakia's Transpetrol has similarly confirmed the suspension, citing "technical reasons on the Ukrainian side" but failed to provide details of the rocket strike.
"The reason for the suspension of supplies has not yet been officially confirmed by the Ukrainian side," said Transpetrol in a statement, adding that it is still gathering more information on the strike and will reveal more details.
The Druzhba pipeline network originates in Russia and splits in Belarus into Ukraine, where it supplies several countries in Eastern and Central Europe including refineries in landlocked Hungary, Slovakia and the Czech Republic. Russia's state-owned pipeline monopoly Transneft was notified by Ukraine that the supply to Hungary had been temporarily suspended.
Meanwhile, natural gas and power prices have also eased after NATO and Poland’s leaders ruled out the possibility that a missile strike on Polish territory was an intentional Russian attack.
World leaders gathering at the G20 summit in Bali have been desperate to diffuse a potential escalation in the Ukraine war after a “Russian-made” missile struck NATO-member Poland killing two people.
The missile landed outside the rural Polish village of Przewodow, about four miles west from the Ukrainian border on Tuesday afternoon. Poland’s president Andrzej Duda says the missile strike appears to be an “unfortunate accident” and the Russian-made missile was likely used by the UKrainian air defense.
By Alex Kimani for Oilprice.com
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