SINGAPORE: Oil prices inched higher on Friday, setting the stage for their sharpest weekly rise since early June, as escalating tensions between Ukraine and Russia disrupted fuel supplies and raised fears of tighter crude markets.
By 0100 GMT, Brent crude futures were up 15 cents, or 0.2 percent, at $69.57 a barrel, while US West Texas Intermediate (WTI) crude gained 23 cents, or 0.4 percent, to $65.21. Both benchmarks are up more than 4 percent this week, their biggest weekly jump since mid-June.
Ukraine-Russia tensions drive market mood
Traders said Ukrainian drone strikes on Russian oil facilities, combined with NATO’s warning that it is prepared to respond to violations of its airspace, have heightened concerns about energy supplies. Moscow has already moved to tighten exports, adding to the pressure.
Russian Deputy Prime Minister Alexander Novak announced on Thursday that the country will impose a partial ban on diesel exports until the end of the year. He also confirmed that an earlier ban on gasoline exports would remain in place.
The disruption to refining capacity has left some Russian regions facing shortages of certain fuel grades, and officials signalled that crude production could soon be scaled back.
US data and Kurdistan exports limit gains
Oil prices had earlier touched their highest level since August 1, helped by a surprise drop in US weekly crude inventories. However, signs of resilience in the American economy capped some of the gains.
Revised figures from the Commerce Department showed the US economy expanded at an annualised pace of 3.8 percent last quarter, stronger than earlier estimates. Analysts said the upbeat data could make the Federal Reserve more cautious about cutting interest rates further, even after last week’s 25 basis point reduction, the first since December.
Adding to market pressures, the Kurdistan Regional Government said on Thursday it plans to resume oil exports within 48 hours, a move that could ease supply concerns.
Weekly outlook
Despite the mixed signals, analysts said this week’s rally reflects how sensitive the oil market has become to geopolitical risks, particularly involving Russia.
“Ukrainian drone strikes, NATO’s warning, and Russia’s curbs on fuel exports have all combined to push oil higher this week,” said Tony Sycamore, analyst at IG.
With both benchmarks on track for their strongest weekly gain in more than three months, traders will now be watching whether Russia follows through on production cuts and how central banks shape monetary policy in the weeks ahead.