Europe’s Refineries Stop Taking Contaminated Russian Oil

Europe’s oil refineries stopped taking piped deliveries of Urals crude from Russia after flows were found to be contaminated, choking off one of the continent’s main sources of supply.

Pumping through a section of the Druzhba pipeline into southern and central Europe was halted overnight, Ukraine said. That brings the link to a complete stop after a larger, northern spur into Poland and Germany had already ceased. It means a temporary loss of at least 1 million barrels a day of crude with more barrels still at risk.

The halt comes at a critical time for a global oil market that’s been hit by restricted supplies of so-called heavier crudes from the likes of Iran, Venezuela, Canada and even Mexico. That’s on top of a pact by producers including Saudi Arabia and Russia to collectively limit production that’s seen prices steadily rising for several months.

“It is bullish for the market, and also for crude differentials,” said PVM Oil Associates Ltd. analyst Tamas Varga. “The Urals market has been quite bullish relative to Brent and now it’s more so.”

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