Oil prices rose on Friday as Ukrainian attacks on Russia’s energy infrastructure have reduced the country’s refinery capacity and reduced fuel exports.
Brent futures closed at $70.13 per barrel, up 71 cents, or 1.02%. WTI crude oil closed at $65.72 per barrel, up 74 cents, or 1.14%.
Markets continue to focus on the situation between Russia and Ukraine. Both indices are expected to post their biggest gains since mid-June.
The decline in refining capacity has left many regions of Russia facing shortages of certain types of fuel. Russia will impose a partial ban on diesel exports by the end of the year and extend the existing ban on gasoline exports.
In addition to Ukraine’s attacks, the US government’s actions against Russia are also proving supportive. Trump continues to pressure US allies to reduce Russian imports. India and Türkiye are reportedly reducing some of their Russian imports.
The warning from NATO member states to respond to the violation of their airspace has escalated tensions stemming from the war in Ukraine and raised the possibility of additional sanctions against Russia’s oil industry.
On the supply side, agencies reported that crude oil exports from northern Iraq are scheduled to resume on Saturday, citing SOMO, the state-owned marketing company that will transport the oil by pipeline to the Turkish port of Ceyhan.
The Commerce Department’s Bureau of Economic Analysis, in its latest forecast released Thursday, noted that the US gross domestic product was revised upwards by 3.8% year-over-year last quarter.
If Russia’s supply to China and India changes, they will seek supplying alternative. The US economic data is improving. The Fed’s interest rate cut will also contribute to demand.
However, stronger-than-expected economic data may prompt the US Federal Reserve to be more cautious about cutting interest rates after last week cutting interest rates by 25 basis points for the first time since December.