Oil Slides As Ukraine Readies Resumption Of Russian Crude Flow To Europe

Amid sanctions on Russian payments – which had reportedly stalled the flow of oil into Europe via Ukraine’s pipelines – a Hungarian refiner has paid the transfer fees enabling the spice oil to flow.

Bloomberg reports that Hungarian refiner Mol says it paid Ukraine a transfer fee to restart crude oil flows from Russia to central and eastern European.

“Mol has conducted negotiations with the Ukrainian and Russian parties on the resumption of transport through the Friendship pipeline, and transferred the fee due for the use of the Ukrainian section of the pipeline,” the refiner said in an emailed statement.

“The Ukrainian party has pledged to resume the transport of crude oil within a matter of days, which had been halted a few days ago due to technical issues emerging on the banking front”

Transneft issued a statement saying that Ukraine confirms it is ready to resume transit and oil may resume flowing to Slovakia by the end of Wednesday.

As a reminder, the southern leg of the Druzhba pipeline, which delivers Russian crude through Ukraine to Hungary, Slovakia and the Czech Republic, halted operations on Aug. 4 after European banks refused to transfer a payment from Transneft to its Ukrainian counterpart Ukrtransnafta JSC amid EU sanctions.

Crude prices extended losses on the news as supply readies to resume with WTI back below $90…

The state of Europe’s energy system remains fragile for sure as the continent is still grappling with constrained supplies of Russian natural gas and low river levels that are hindering the distribution of coal and diesel.