Oil prices climbed on Friday, on track for a weekly gain of more than 4 per cent, as Ukraine’s attacks on Russia’s energy infrastructure prompted Moscow to curb fuel exports.
Brent futures gained 89 cents, or 1.28 per cent to $70.31 a barrel by 9:46 a.m. CDT (1446 GMT). U.S. West Texas Intermediate (WTI) crude rose by $1.16, or 1.79 per cent to $66.14 a barrel.
“Markets continued to be focused on the situation between Russia and Ukraine,” said John Kilduff, partner with Again Captial. “These drone attacks by Ukraine are beginning to add up.”
Both benchmarks are set to register their biggest increases since mid-June.
Russia will introduce a partial ban on diesel exports until the end of the year and extend an existing ban on gasoline exports, Deputy Prime Minister Alexander Novak said on Thursday.
The drop in refining capacity has left several Russian regions facing shortages of certain grades of fuel.
NATO’s warning of a response to further violations of member nation airspace has ratcheted up tensions from the war in Ukraine and raised prospects of additional sanctions on Russia’s oil industry, said ANZ analyst Daniel Hynes.
On the supply side, crude oil exports were scheduled to resume on Saturday from Iraq’s semi-autonomous Kurdistan region to Turkey, three sources familiar with the plans told Reuters.
On the demand side, U.S. gross domestic product increased at an upwardly revised 3.8 per cent annualized rate in the past quarter, the Commerce Department’s Bureau of Economic Analysis said in its latest estimate on Thursday.
“If Russia’s supply to China and India is changed they’ll be looking for supply,” Kilduff said. “U.S. economic data has been OK. And with the Fed easing interest rates that will contribute to demand.”
But, stronger than expected economic data could make the U.S. Federal Reserve more cautious about cutting interest rates after a cut of 25 basis points last week, its first since December.
