Onome Amuge
Oil prices traded in bullish territory after a series of Ukrainian drone strikes on Russian energy infrastructure disrupted exports and added fresh volatility to global markets, while Moscow announced an extension of restrictions on fuel shipments abroad.
Brent crude, the international benchmark, settled at $70.13 a barrel, up 71 cents, or just over 1 per cent. West Texas Intermediate, the US marker, gained 74 cents to close at $65.72. Both contracts experienced their strongest weekly gains since mid-June, reversing part of the summer slide.
“Markets continued to be focused on the situation between Russia and Ukraine. These drone attacks by Ukraine are beginning to add up,” said John Kilduff, partner at Again Capital.
The attacks have forced several Russian refineries offline, prompting shortages of certain fuel grades in domestic markets. On Thursday, deputy prime minister Alexander Novak confirmed that Russia would extend an existing ban on gasoline exports and impose a partial ban on diesel exports through the end of the year in an effort to stabilise local supplies.
The latest escalation comes as western governments consider fresh measures against Moscow. NATO, during the week, issued a warning of firm responses to any further violations of allied airspace, intensifying fears of broader spillovers from the war.
Daniel Hynes, analyst at ANZ, said the combination of drone strikes and export bans was increasingly tightening Russia’s position in global fuel markets and raising the likelihood of additional sanctions targeting its oil sector.
Andrew Lipow, president of Houston-based consultancy Lipow Oil Associates, noted that US policy was also weighing on flows. “President Trump continues to pressure US allies to reduce Russian imports. We might see India and Turkey reduce some of their Russian imports,”he said.
Russia has redirected much of its crude to China and India since the EU embargo and G7 price cap came into force last year. Any disruption to that flow could prompt shifts in Asian procurement strategies, with Middle Eastern suppliers and US exporters likely to benefit.
The disruption in Russia comes as other sources of supply prepare to return to market. Iraq’s state oil marketer SOMO confirmed exports from the semi-autonomous Kurdistan region would resume via pipeline to Turkey’s Ceyhan port from Saturday, ending months of halted flows.
“The market will be watching Kurdish production to see what that will add to supply,” said Lipow. Exports from the region have typically averaged between 300,000 and 450,000 barrels a day, volumes that could help offset part of the Russian shortfall if sustained.
On the demand side, US economic data provided modest support. The Bureau of Economic Analysis revised second-quarter GDP growth upwards to 3.8 per cent annualised, suggesting stronger momentum than previously estimated.
“If Russia’s supply to China and India is changed they’ll be looking for supply. US economic data has been OK. And with the Fed easing interest rates that will contribute to demand,” Kilduff added.
