Oil prices are increasing due to concerns over the supply disruption caused by Russia's ban on fuel exports
- rabeelrana
Oil prices saw an uptick on Friday, driven by renewed global supply concerns stemming from Russia’s ban on fuel exports. These concerns offset fears of reduced demand due to macroeconomic challenges and higher interest rates.
Brent futures increased by 80 cents or 0.86%, reaching $94.10 per barrel, while U.S. West Texas Intermediate (WTI) crude futures rose by 95 cents or 1.06% to $90.58 per barrel. Brent had initially reached $94.29 per barrel, up 99 cents, and WTI peaked at $90.80, up by $1.17.
Despite their relative stability over the week, both benchmarks had gained over 10% in the three preceding weeks due to worries about constrained global supply. Russia’s Transneft suspended diesel deliveries to crucial Baltic and Black Sea terminals in Primorsk and Novorossiysk, causing further uncertainty. Russia had temporarily banned gasoline and diesel exports to countries outside a select group of four ex-Soviet states in an effort to stabilize its domestic fuel market, with no specified end date.
This export ban adds to the existing uncertainty in the global refined product supply landscape, potentially prompting affected nations to seek alternative suppliers. Russian wholesale gasoline prices dropped nearly 10%, and diesel prices fell by 7.5% on the St. Petersburg International Mercantile Exchange on Friday.
However, macroeconomic challenges continue to impact oil demand sentiment. Data from the Purchasing Managers’ Index (PMI) suggests that the euro zone economy is likely to contract in the third quarter. The UK’s economic contraction also deepened in September compared to August, as indicated by additional PMI data.
The U.S. Federal Reserve, in its recent announcement, maintained interest rates but adopted a more hawkish stance, raising concerns that higher rates could potentially hinder economic growth. Additionally, U.S. offline refinery capacity was expected to reach 1.4 million barrels per day (bpd) during the week, compared to 800,000 bpd in the previous week, according to IIR Energy.