Oil prices fall after Russia’s decision to scrap its ban on natural gas

LONDON/BERLIN (Reuters) – Oil prices dropped sharply on Thursday as Russia’s top energy regulator announced its decision to cancel a ban on Russian gas and urged foreign companies to buy gas from domestic companies.

Oil prices rose for a second day after Russia said it would suspend gas exports to Europe and Asia after President Vladimir Putin signed a decree allowing Russian companies to export natural gas to Europe.

Russian Prime Minister Dmitry Medvedev said on Wednesday that Russian gas firms had been granted licenses to export to Europe through European countries and other countries with access to Russian gas.

Medvedev’s announcement on Thursday raised the price of Russian gas by 2.5 percent to around $40 per million British thermal units (MBtu), according to data from the Energy Information Administration (EIA).

The price was also down from the opening price of $46.50 per MBtu in mid-November.

The price drop came after the Russian energy minister said the government would stop selling Russian gas to the EU and the United States.

The European Union and United States have been trying to reduce Russia’s influence in Europe’s energy market after Putin’s decision in November to block gas exports from Europe to Europe in retaliation for Western sanctions.

Russia’s state-owned energy giant Rosneft, which is majority-owned by Putin, said in February it would sell natural gas from its fields to other countries.

Russia also has a long history of using natural gas for electricity generation, but it is now importing energy from Russia’s energy giants Gazprom and Gazprom-NEO.

In Europe, Gazprom, whose output has fallen by about one-third since the crisis in Ukraine, is a major buyer of gas from Russia, but its share of the global market has shrunk.