Oil up over escalating supply woes as Russia halts gas to Poland, Bulgaria

By Sibel Morrow

ANKARA (AA) - Oil prices rose on Wednesday on supply concerns after Russia announced its energy firm Gazprom had halted gas supplies to Poland and Bulgaria over their refusal to pay in rubles for gas imports.

International benchmark Brent crude cost $105.56 per barrel at 0710 GMT for a 0.90% increase after closing the previous session at $104.61 a barrel.

American benchmark West Texas Intermediate (WTI) traded at $102.89 per barrel at the same time for a 1.17% gain after the previous session closed at $101.70 a barrel.

Russia's energy giant Gazprom announced the suspension of gas deliveries to Bulgaria and Poland because of their refusal to pay in rubles, an order implemented by Russian President Vladimir Putin on March 31 for gas imports to "unfriendly countries" after the EU and US froze currency assets of the Russian Central Bank.

According to Gazprom's statement, neither Bulgaria nor Poland paid for the supplied volumes as of April 26.

Gazprom said that as Bulgaria and Poland are transit states, "in the event of unauthorized withdrawal of Russian gas from transit volumes to third countries, supplies for transit will be reduced by this volume."

Blunting the price momentum, the American Petroleum Institute (API) announced its estimate of over a 4.78 million-barrel increase in US crude oil inventories late Tuesday, relative to the market expectation of a rise of 2.17 million barrels.

The predicted increase in stockpiles signals a drop in crude demand in the US, the world's top oil consumer.