Oil prices rebounded on Thursday after a Russian ban on fuel exports snapped focus away from Western economic headwinds and back to worries on throttled crude supply to the end of 2023.
Brent futures for November delivery were up $1.02 – or 1.09 percent – to $94.55 a barrel, while the US West Texas Intermediate crude (WTI) climbed $1.27, or 1.42 percent, to $90.93, the lowest since September 14. Both benchmarks had fallen more than $1 earlier on Thursday, Reuters reported.
Russia temporarily banned exports of gasoline and diesel to all countries outside a circle of four ex-Soviet states with immediate effect in order to stabilise the domestic fuel market, the government said on Thursday.
The shortfall will mean that Russia’s fuel buyers will have to shop elsewhere, prompting refiners to process more of a dwindling crude supply to meet that demand, the Reuters report said, quoting Tamas Varga of oil broker PVM.
Diesel prices in Europe reportedly jumped after the announcement on Thursday, rising almost 5 percent to above $1,010 a tonne.
Russia is one of the world’s largest suppliers of diesel and a leading producer of crude.
Tension mounts as oil prices rise
Its crude exports have already been trimmed under a deal with Saudi Arabia and the wider OPEC+ group, which has contributed to a 30 percent jump in oil prices since June.
Market participants are concerned that Russia is moving to tighten oil supply at a time when central banks are struggling to get inflation under control, and with crude prices potentially poised to break above $100 a barrel for the first time in 13 months.
“The Russian news came out and tension from the longer-term outlook immediately shifted back to supply,” said Vargas, referencing the US Federal Reserve’s hawkish signals.
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