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. Last Updated: 07/27/2016

Oil Prices Rebound on Fears of Russian Cuts

LONDON -- Oil prices staged a recovery Thursday as traders started to worry about the impact of potential long disruptions to Russian supplies.

Benchmark Brent burst above $13 a barrel for the first time in a month, trading at $13.01 by midafternoon, up 55 cents over the day.

The rebound made some inroads into this year's price losses, which have dragged Brent values a third below last year's average of $19.30.

A global stock glut built up early this year as Asian demand fell away has been stifling any upturn, despite some 3 million barrels per day of producer cuts aimed at rebalancing the market.

But prices have at last got a jolt from the threat that Russia's financial crisis could seize up its 2.5 million bpd oil export system.

Russian crude exports from its main Black Sea and Baltic outlets have suffered severe cuts since Aug. 28 as the chaos among Russia's banks prevents lifters getting hold of the money to pay necessary customs dues.

While the odd crude cargo is now loading, traders fear that the problems could well persist given the scale of Russia's economic problems.

Russia is also a key supplier of oil products such as gas oil and fuel oil to Europe through the same outlets, although so far product liftings have not been hard hit.

Prolonged problems with Nigerian supply are further draining supplies to Europe.

Royal Dutch/Shell has had to stop some 600,000 bpd of export from the West African state for around two weeks on technical problems and pipeline sabotage by disaffected local communities.

The market got a further lift from an unconfirmed report that the Venezuelan and Saudi Arabian oil ministers would meet in London on Sept. 7 to discuss the oil price depression.

The two countries joined up with Mexico to spearhead this year's producer cutback pacts. A planned meeting between those three countries late last month failed to come off.

Big oil companies have also been forced to pool their resources to stave off the worst effects of the low price climate.

Shell and Texaco on Thursday announced that they planned to form a joint venture for their European refining and marketing assets.

The move follows a similar alliance already in place between British Petroleum and Mobil, as well as BP and Amoco's August agreement to merge completely.