Oil prices climbed on Thursday, paring some of their steep losses in the previous session, as the potential for an energy standoff between European nations and Russia overshadowed fears of recession and rising inflation.
Brent crude futures rose by 25 cents or 0.3 per cent to $88.25 per barrel after closing at their lowest since early February in the previous session. US crude futures were up 40 cents, or 0.5 per cent, at $82.52 per barrel.
Prices drew some support from Russian President Vladimir Putin issued a threat to halt the country's oil and gas exports if price caps are imposed by European buyers.
The European Union proposed capping Russian gas prices only hours later, raising the risk of rationing in some of the world's richest countries this winter if Moscow carries out its threat.
Russia's Gazprom has already halted flows from the Nord Stream 1 pipeline, cutting off a substantial percentage of supply to Europe.
Reacting to soaring energy prices, Britain's new Prime Minister Liz Truss will on Thursday scrap the country's fracking ban and will seek to make more use of its reserves in the North Sea, the Telegraph newspaper reported earlier today.
The British government is expected to announce dozens of new North Sea oil and gas exploration licences in an effort to boost domestic production, two sources familiar with the government's discussions told Reuters.
Meanwhile a number of central banks around are expected to begin a new round of interest rate hikes to fight inflation.
The European Central Bank is expected to raise interest rates sharply when it meets later on Thursday. A US Federal Reserve meeting follows on September 21.