Oil Prices Head for Biggest Weekly Gain Since June as Russia Cuts Fuel Exports

Oil prices edged higher on Friday and were set for their steepest weekly gain since early June. The rally came as Ukraine’s attacks on Russia’s energy infrastructure forced Moscow to restrict fuel exports and move closer to cutting crude output.

Brent and WTI Extend Weekly Gains

Brent crude futures rose 13 cents, or 0.2%, to $69.55 a barrel by 04:54 GMT. U.S. West Texas Intermediate (WTI) crude gained 22 cents, or 0.3%, to $65.20 a barrel.

Both benchmarks are up more than 4% this week, their strongest weekly increase since the week ending June 13.

“Gains were supported by Ukrainian drone strikes on Russian oil infrastructure, NATO’s warning to Moscow about future airspace violations, and Russia’s move to halt key fuel exports,” said IG analyst Tony Sycamore.

Russia Moves to Restrict Fuel Exports

Deputy Prime Minister Alexander Novak announced a partial ban on diesel exports until year-end, while also extending an existing ban on gasoline shipments.

Falling refining capacity has pushed Russia close to reducing crude output, and several regions are already facing fuel shortages.

Rising Geopolitical Risks

NATO’s warning of a response to further airspace violations has heightened tensions from the Russia-Ukraine war. Analysts at ANZ said this raises the risk of new sanctions on Russia’s oil industry.

Both Brent and WTI hit their highest levels since August 1 earlier this week. Prices were supported by a surprise drop in U.S. crude inventories and ongoing Ukrainian strikes on Russian energy facilities.

Economic Data and Iraq Exports Cap Gains

Some gains were capped by stronger U.S. economic data. The Commerce Department said GDP grew 3.8% in the second quarter, above earlier estimates. This may lead the Federal Reserve to slow the pace of interest rate cuts.

In addition, the Kurdistan Regional Government said on Thursday it would resume oil exports within 48 hours. The move could bring up to 500,000 barrels per day back to global markets.

“Geopolitical tensions reversed earlier losses after the Iraq Kurdistan deal to restart exports,” said Daniel Hynes of ANZ.