Oil continues to rise for a second day amid fears of tight supplies

Oil prices rose on Tuesday for the second day in a row amid growing fears of tight European supplies after Russia, a major oil and natural gas supplier to the region, cut gas supplies through a major pipeline.

Brent crude futures for September rose $1.51, or 1.4 percent, to $106.66 a barrel by 0339 GMT, having jumped 1.9 percent the previous day.

US West Texas Intermediate crude contracts for September also increased $1.36, or 1.4 percent, to $98.04 a barrel, after rising 2.1 percent on Monday.

Russia cut gas supplies to Europe on Monday after Gazprom said supplies via the Nord Stream 1 pipeline to Germany would be reduced to just 20 percent of its capacity.

Russia’s supply cuts will prevent countries from achieving their goals of refilling natural gas reserves before the winter demand period. Germany, Europe’s largest economy, faces the prospect of gas rationing for the industry to keep its citizens warm during the winter months.

This may prompt end users to exchange gas for petroleum products, especially diesel. But this also carries risks because Russia supplies the region with most of the diesel and prices are expected to rise for drivers who rely on the fuel.

Supplies of crude oil, oil products and gas to Europe have been disrupted by Western sanctions and disputes with Russia over payment since its February 24 invasion of Ukraine, which Moscow describes as a “special military operation”.