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NEW DELHI : Crude oil prices climbed more than 1% in early trading on Tuesday after Russian energy giant Gazprom announced plans to drastically cut gas supplies to Europe.

Starting Wednesday, the Russian state-controlled company plans to reduce gas supplies through the Nord Stream 1 pipeline to Germany to just 20% capacity. This comes as the West intensifies efforts to corner Russia for its invasion of neighbour Ukraine.

Traders expect that the move by Gazprom would lead European nations to switch to crude oil to meet their energy requirements.

Around 10.30 am, the September contract of Brent on the Intercontinental Exchange was at $106.45 per barrel, 1.24% higher from its previous close. The September contract of West Texas Intermediate (WTI) on NYMEX rose 1.27% to $97.93 a barrel.

Ravindra Rao, head of commodity research at Kotak Securities noted that the rise in oil prices also comes on the back of a weak dollar and persistent supply risks relating to Russia.

“Western countries are planning to put a cap on Russian crude oil price while Russian natural gas supply to Europe remains challenged. However, weighing on crude price are demand concerns amid disappointing economic data, downbeat growth forecasts and persisting virus concerns in China. Crude may struggle for direction as growth worries counter supply risks; however the general bias may remain weak if risk sentiment weakens again," Rao said.

Rahul Kalantri, vice president for commodities at Mehta Equities, said Libya’s National Oil Corporation said it aimed to bring back production to 1.2 million barrels per day in a fortnight, from around 860,000 barrels currently.

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