Oil prices rose nearly $1 per barrel on Thursday after dropping through key technical support levels in the previous session, as an energy standoff between European nations and Russia focused investor minds on how tight fuel supply may become.

Brent crude futures rose by 91 cents, or one per cent, to $88.91 per barrel by 03:31 GMT after closing at their lowest since early February in the previous session. US crude futures were up 95 cents, or 1.2pc, at $82.89 per barrel.

Prices drew support from Russian President Vladimir Putin’s 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.

The oil price trend is being shaped by “various external forces such as the energy battle between Western countries and Russia”, said analysts from Haitong Futures in a note.

The potential impact of any deal or reinstating an accord between the West and Iran on Tehran’s nuclear programme would also be significant, they noted. An agreement would see sanctions on Iranian oil exports lifted.

Elsewhere, 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 Sept 21.