Oil slides after threat by Putin and UK fracking and drilling plan

Putin threatens that Russia is prepared to halt oil and gas exports to Europe if the EU introduces a price cap on fossil fuels, leading to a drop in oil prices.
Photo: TASS HOST PHOTO AGENCY/VIA REUTERS / X80001
Photo: TASS HOST PHOTO AGENCY/VIA REUTERS / X80001
BY MARKETWIRE, TRANSLATED BY CHRISTOFFER ØSTERGAARD

Oil prices decline Thursday morning – after going up by 1% Wednesday night after Russian President Vladimir Putin threatened to halt oil and gas exports to Europe in the event that the EU introduces a cap on prices, writes Reuters.

A barrel of European benchmark crude Brent costs USD 88.90 Thursday morning against USD 89.71 Wednesday afternoon. At the same time, US counterpart West Texas Intermediate trades for USD 82.87 per barrel against USD 83.64 Wednesday afternoon

State-owned gas company Gazprom has already cut off gas supplies to Europe through the Nord Stream 1 pipeline, which means that the EU proposal could force some of the richest countries in the world to ration both oil and gas this upcoming winter.

According to analysts from Haitong Futures, a potential nuclear accord between the EU and Iran could also have a significant impact on oil prices in the time ahead.

Such an accord would mean that existing sanctions on Iranian oil exports would be lifted.

Meanwhile, newly appointed UK Prime Minister Liz Truss seeks to scrap a ban on fracking and tap into oil reserves in the North Sea.

Two unnamed sources close to the UK government tells Reuters that the move is a response to soaring energy prices and involves plans to announce dozens of oil and gas licenses in an attempt to ramp up domestic output.

Moreover, the European Central Back is set to convene a meeting on Thursday where another sharp interest rate hike is expected to be among the topics of discussion.

The US Federal Reserve will follow suit with a meeting scheduled for Sep. 21.

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