Brent Steady At $107 On Russian Threats To Cut Off European Gas Supply

Brent prices headed towards $107 as the possibility of more Libyan oil reentering the market became more likely.

The commodity traded at $107.40 at 7:44 GMT as investors kept a close eye on developments in the situation in Ukraine, which has been threatening to escalate.

Brent prices have been under pressure as Libya slowly reopens its export terminals after an eight month conflict between rebel groups and the nation's government cut Libyan oil exports by more than half.

Now, the government has reached a deal with the protesters and they are slowly returning control of the export terminals to state-run National Oil Corp. Although National Oil Corp has reopened many of the nation's oilfields, rebel groups are still controlling two of the nation's largest ports as well as Libya's biggest refinery.

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However, prices were underpinned by a sudden escalation in the conflict between the West and Russia over the situation in Ukraine. CNBC reported that Russian President Vladimir Putin said that gas supplies could be cut off for Ukraine, and in turn the rest of Europe, as the Ukrainian government has unpaid bills with Moscow.

Putin's warning was countered by a US accusation that Putin is attempting to use energy “as a tool of coercion."

The icy relations between Moscow and the West could also face pressure as some leaders are worried that Russia may make an oil-for-goods agreement with Iran in spite of current sanctions.

The US has warned Putin that any such deal would go against the current negotiations between six world powers, including Russia and the US, and Iran over Tehran's nuclear program.