Oil prices rose on Friday as Ukraine’s drone attacks on Russia’s energy infrastructure cut the country’s fuel exports, with Brent futures settling at $70.13 a barrel after going up by 71 cents or 1.02 per cent, while the US West Texas Intermediate (WTI) futures finished at $65.72 per barrel after it gained 74 cents or 1.14 per cent.
Markets continued to be focused on the situation between Russia and Ukraine as the latter stepped up attacks on its enemy’s energy infrastructure, which has now led to Russia introducing a partial ban on diesel exports until the end of the year and extending an existing ban on petroleum exports.
Reuters reported that the drone hits on some of Russia’s biggest refineries, slashing refining processing rates by 20 per cent on certain days. There isn’t a run on pump stations in the country, but the drop in refining capacity has left several Russian regions facing shortages of certain grades of fuel.
At the end of August, Russia extended the petrol ban until September 30, 2025, for producers, and until October 31 for non-fuel-producing traders.
Now, the government plans another extension of the ban, enacted in March 2025, to the end of the year, and a ban on diesel exports for non-fuel-producing traders.
Various reports have said that at least 10 refineries have been targeted with drones by Ukraine, and some of them have sustained damages and had to temporarily halt crude intake.
The US government action was also supportive to prices as President Trump continues to pressure US allies to reduce Russian imports.
Warning by the North Atlantic Treaty Organisation (NATO) of a response to further violations of member nations’ airspace has ratcheted up tensions from the war in Ukraine and raised prospects of additional sanctions on Russia’s oil industry.
Crude oil exports are scheduled to resume on Saturday from Iraq’s semi-autonomous Kurdistan region, which will transport the oil via pipeline to Turkey’s Ceyhan port.
On the demand side, US 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.
However, stronger-than-expected economic data could make the US Federal Reserve more cautious about cutting interest rates after a cut of 25 basis points last week, its first since December.