Russia39;s Gazprom tightens squeeze on gas flow to Europe
Fed expected to hike rates 75 bps on Wednesday
Brent premium to U.S. crude hits widest in three years

TOKYOSINGAPORE, July 26 Reuters Oil prices rose on Tuesday for a second day on increasing concerns about tightening European supply after Russia, a key oil and natural gas supplier to the region, cut gas supply through a major pipeline.

Brent crude futures for September settlement rose 1.66, or 1.6, to 106.81 a barrel by 0618 GMT, extending a 1.9 gain in the previous day.

U.S. West Texas Intermediate WTI crude futures for September delivery increased 1.47, or 1.5, to 98.17 a barrel, having gained 2.1 on Monday.

Russia tightened its gas squeeze on Europe on Monday as Gazprom said supplies through the Nord Stream 1 pipeline to Germany would drop to just 20 of capacity. 

Russia39;s cut in supplies will leave countries unable to meet its goals to refill natural gas storage ahead of the winter demand period. Germany, Europe39;s biggest economy, faces potentially rationing gas to industry to keep its citizens warm during the winter months.

This could prompt endusers to swap their gas for oil products, particularly diesel. But this also carries risks since Russia supplies most of the region39;s diesel fuel and prices for drivers who depend on the fuel are expected to rise.

Higher gas prices, triggered by Russia39;s gas squeeze, could lead to additional switching to crude from gas and support oil prices, said…