Russia suspends oil exports through Druzhba pipeline, leading to price increases

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Russia suspends oil exports through Druzhba pipeline, leading to price increases

Russia is suspending crude oil exports through its Druzhba pipeline, leading to price increases.

The flow of oil is cut off to Hungary, Slovakia, and the Czech Republic. Russian oil company Transneft blamed its counterpart in Ukraine for the situation, telling Russian state-owned news agency RIA Novosti that the Ukrainian company stopped transport of oil because of a problem with Russia's ability to pay.

Russia's failure to pay was a result of Western sanctions, according to Insider. The northern section of the pipeline will continue to function normally, according to a Transneft spokesman. The section of the pipeline provides oil to Poland and Germany via Belarus.

After the Ukrainian part of the pipeline was halted, crude oil prices went up by 1.36% to nearly $98 a barrel, according to Insider. The crude price of WTI went up 1.22%, reaching almost $92 a barrel.

The situation occurred two over weeks after Russian state-owned energy company Gazprom cut natural gas flow to Germany, reducing supplies through the Nord Stream 1 pipeline to just 20%.

The pipeline had been down for 10 days for scheduled maintenance. Gazprom blamed sanctions that held up the return of a turbine that had been sent to Canada for repairs in June.

Europe is heavily dependent on Russian energy, importing about 40% of its gas and 30% of its oil from Russia.

Ukraine is looking to increase its energy exports to Europe. In July the country began supplying Slovakia, Hungary and Moldova.