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Brent touches $75/bbl after Europe halts Russian crude imports

 Brent touches /bbl after Europe halts Russian crude imports

By Laila Kearney

NEW YORK (Reuters) - Brent crude hit $75 per barrel on Thursday for the first time in nearly six months after quality concerns suspended some Russian crude exports to Europe while the United States prepared to tighten sanctions on Iran.

Poland and Germany suspended imports of Russian crude via the Druzhba pipeline, citing contamination. The pipeline can ship up to 1 million barrels per day, or 1 percent of global crude demand, and about 700,000 bpd of flow was suspended, according to trading sources and Reuters calculations.

Russia, the world's second-largest crude exporter, said it planned to start pumping clean fuel to Europe through the pipeline on April 29.

Brent crude futures were up 43 cents to $75.00 a barrel by 1:58 p.m. EDT (1758 GMT) after rallying to a high of $75.60, the highest since Oct. 31.

U.S. West Texas Intermediate crude was trading 8 cents lower on the day at $65.81 a barrel, after hitting a session high of $66.28.

"Any kind of international grade is going to get bid, while the opposite is true here in the U.S.," said Mizuho director of futures Bob Yawger, explaining why Brent has rallied on the contamination news, while WTI has been flat.

"To a certain degree, the storage build yesterday was a pretty big one, plus the first build in a couple weeks at Cushing, has put some pressure on WTI, though we are not that far away from the highs," Yawger said.

U.S. crude inventories last week rose 5.5 million barrels to their highest since October 2017 at 460.6 million barrels, as stocks at the Cushing, Oklahoma, delivery hub for WTI rose 463,000 barrels, government data showed on Wednesday.

(Graphic: Druzhba Pipeline Map, click https://tmsnrt.rs/2DytnnM)

The United States this week said it would end all exemptions for buyers of Iranian oil. OPEC's third-largest producer has been under U.S. sanctions for more than six months, but several major buyers, including China and India, were given temporary exemptions until this week. Beginning in May, those countries have to halt oil imports from Tehran or face sanctions.

The decision follows supply cuts by the Organisation of the Petroleum Exporting Countries and non-member producers, including Russia, since the start of the year aimed at propping up oil prices.

Still, Brian Hook, U.S. special representative for Iran and senior policy adviser to the secretary of state, said on Thursday "there is plenty of supply in the market to ease that transition and maintain stable prices".

Consultancy Rystad Energy said Saudi Arabia and its main allies could replace lost Iranian oil.

The cuts led by OPEC are in part a response to ballooning U.S. crude production, currently at a record 12.2 million bpd, making the United States the world's biggest producer.

(Graphic: U.S. oil drilling, production & storage levels, click https://tmsnrt.rs/2DxgF8W)

(Additional reporting by Ahmad Ghaddar in London, Henning Gloystein in Singapore; Editing by Dale Hudson and Marguerita Choy)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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Updated Date: Apr 26, 2019 01:05:33 IST