Organic chlorides from a private storage terminal in the middle of the vast Russian Federation have contaminated crude oil deliveries to key European refiners of Russian feedstock, choking off one of Europe's main sources of crude and leading to a jump in crude oil prices before slumping by the end of last week.
Contamination could hit about 1.5m barrels of crude delivered per day through the Druzhba pipeline and Ust Luga port.
Russian Prime Minister Dmitry Medvedev instructed trade and energy officials to conduct quality checks within seven days on crude transported to Belarus and Europe, and to send materials to prosecutors to “punish those responsible for violations,” according to an order posted on the government website.
Pumping through the southern section of the Druzhba pipeline into central and eastern Europe was halted overnight, Ukraine said. That brought the link to a complete stop since the larger northern branch of the link through Belarus into Poland and Germany had already shut down. Europe will be deprived of least 1 million barrels a day of crude flows for the duration of the outage.
The halt comes at a critical time for a global oil market that has been hit by restricted supplies of so-called heavier crudes from the likes of Iran, Venezuela, Canada and even Mexico. And that comes on top of a pact by producers including Saudi Arabia and Russia to collectively limit production that’s seen prices steadily rising for several months.