Oil Prices Set For Sharpest Weekly Jump Since Israel-Iran War

By Charles Kennedy of OilPrice.com

Crude oil prices today were set for their sharpest weekly rise since early June, when Israel launched a missile strike on Iran. This time, the jump was triggered by the news that Russia would introduce curbs on diesel exports, suggesting supply tightness.

At the time of writing, Brent crude was trading at $70.74 per barrel and West Texas Intermediate was changing hands for $66.36 per barrel.

Yesterday, Deputy Prime Minister Alexander Novak said an already operating ban on gasoline exports would be extended until the end of the year, and a ban on exports of diesel by parties other than producers would be added to the gasoline restrictions. The ban would exclude deliveries under existing international supply contracts. The aim is to secure fuel supply for the domestic market, Novak told the media.

The news sent Brent crude and West Texas Intermediate higher as observers and traders took it to mean that Ukrainian drone strikes on Russian refineries have done enough damage to prompt a squeeze on fuel production. This squeeze might in turn lead to oil production curbs if the attacks continue.

“Gains were supported by ongoing Ukrainian drone strikes targeting Russian oil infrastructure, NATO’s warning to Russia it is ready to respond to future violations of its airspace, and Russia’s move to halt key fuel exports,” IG analyst Tony Sycamore told Reuters.

Meanwhile, President Trump has pressed Turkey’s president, Recep Erdogan, to stop buying oil from Russia, adding to the upward pressure on international benchmarks. Trump has also discussed oil with Hungary’s Viktor Orban, whose foreign minister earlier this week reiterated the Hungarian government’s stance that it would not compromise its energy security focus by budging to pressure to stop importing Russian crude.

On the bearish side, exports of crude from Iraq’s Kurdistan region are set to be restarted over the weekend, adding 230,000 bpd to international flows.