Global oil prices edged higher on Friday, setting both benchmarks on course for their strongest weekly gain in months, as Ukraine’s continued attacks on Russian energy facilities forced Moscow to tighten fuel export restrictions and consider reducing crude production.
Contents
Geopolitical Tensions Driving the MarketSupply Factors Supporting PricesEconomic Data Limits Gains
By 06:35 GMT, Brent crude futures were up 21 cents (0.3%) at $69.63 per barrel, while U.S. West Texas Intermediate (WTI) crude gained 32 cents (0.5%) to reach $65.30 per barrel. Both contracts are poised to finish the week with gains of more than 4%, their sharpest rally since mid-June when Israel and Iran’s airstrikes sent markets surging.
Geopolitical Tensions Driving the Market
Analysts noted that prices were supported by a combination of Ukrainian drone strikes on Russian refineries, NATO’s warnings to Moscow over potential airspace violations, and Russia’s decision to halt exports of key fuels.
On Thursday, Deputy Prime Minister Alexander Novak announced that Russia would extend its gasoline export ban and impose a partial suspension of diesel shipments until year-end. The move comes as several Russian regions experience shortages of refined products, pushing Moscow closer to curbing crude output.
“NATO’s firm stance and the risk of new sanctions on Russia’s energy sector have further heightened supply concerns,” said Daniel Hynes, an analyst at ANZ Bank, adding that geopolitical instability has been the dominant force behind this week’s market momentum.
Supply Factors Supporting Prices
Beyond geopolitics, oil prices also drew support from a surprise drop in U.S. crude inventories, which signaled tighter supply. This week, both Brent and WTI reached their highest levels since August 1.
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Meanwhile, the Kurdistan Regional Government (KRG) announced it would restart oil exports within 48 hours following a landmark agreement. The return of as much as 500,000 barrels per day to the global market initially pressured prices, but analysts say heightened tensions in Europe quickly reversed those losses.
Economic Data Limits Gains
Capping the rally, fresh U.S. data pointed to stronger-than-expected economic growth. The Commerce Department’s Bureau of Economic Analysis revised second-quarter GDP upward to 3.8% annualized growth. While the U.S. Federal Reserve cut interest rates by 25 basis points last week — its first reduction since December — the robust data may make policymakers more cautious about pursuing further rate cuts.
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