Oil prices edged higher on Friday, tracking a weekly gain of more than 4%, as Ukrainian strikes on Russia’s energy infrastructure prompted Moscow to limit fuel exports and brought the country close to reducing crude output.
Brent futures rose 21 cents, or 0.3%, to $69.63 a barrel by 0635 GMT, while U.S. West Texas Intermediate (WTI) crude futures added 32 cents, or 0.5%, to $65.30 a barrel.
“Gains were supported by ongoing Ukrainian drone strikes targeting Russian oil infrastructure, NATO’s warning to Russia it is ready to respond to future violations of its airspace and Russia’s move to halt key fuel exports,” said IG analyst Tony Sycamore.
Both benchmarks are on course for their largest weekly increases since the week ending June 13, when Brent jumped 11.7% and WTI surged 13% amid air strikes between Israel and Iran.
Russia announced a partial ban on diesel exports until year-end and extended an existing ban on gasoline exports, Deputy Prime Minister Alexander Novak said Thursday. Reduced refining capacity has pushed Moscow toward potential crude output cuts, as several regions face shortages of specific fuel grades.
“NATO’s warning of a response to further violations of its airspace has ratcheted up the tensions from the Russia-Ukraine war and raised prospects of additional sanctions on Russia’s oil industry,” said Daniel Hynes, an analyst at ANZ.
Both Brent and WTI also hit their highest levels since August 1 earlier this week, fueled by a surprise drop in U.S. weekly crude inventories and Ukraine’s continued attacks on Russian energy facilities.
Offsetting some of the gains, U.S. GDP grew at an upwardly revised annualized rate of 3.8% in Q2, according to the Commerce Department’s Bureau of Economic Analysis. Stronger-than-expected economic data could make the Federal Reserve more cautious about further rate cuts. The U.S. central bank reduced rates by 25 basis points last week, its first cut since December, signaling potential additional reductions ahead.
“The Kurdistan Regional Government’s announcement on Thursday that oil exports would resume within 48 hours also pressured prices,” said Hynes. “Geopolitical tensions reversed earlier losses after a landmark agreement was reached to allow the resumption of exports from Iraq’s Kurdistan, which could return up to 500kb/d to the global market.”
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