Russia's Fuel Export Cuts Drive Oil Prices Up 1.14%

On Friday, oil prices closed higher as Russia's reduction in fuel exports provided a boost to the market. The increase in oil prices was driven by Moscow's decision to limit fuel exports in response to Ukraine's attacks on Russian energy infrastructure. This move has led to concerns about supply shortages, particularly in Europe, which is structurally deficient in refined oil products.

The New York Mercantile Exchange's November-delivery West Texas Intermediate (WTI) crude oil contract rose by 0.74 dollars, or 1.14%, to close at 65.72 dollars per barrel. Meanwhile, the settlement price for Brent crude oil increased by 0.71 dollars, or 1.02%, to close at 70.13 dollars per barrel.

Analysts have noted that geopolitical risk premiums have been steadily increasing over the past two months due to drone attacks by Ukraine, which have now evolved into actual supply shortages. This situation is particularly challenging for Europe, which faces structural deficiencies in refined oil products. The reduction in refining capacity has led to shortages of certain grades of fuel in multiple regions of Russia.

Russia's Deputy Prime Minister announced on Thursday that the country would implement a partial ban on diesel exports until the end of the year and extend the existing ban on gasoline exports. This decision comes as tensions in the Ukraine conflict escalate, with NATO warning of potential responses to further incursions into its airspace. This has increased the likelihood of additional sanctions being imposed on Russia's oil industry.

In terms of supply, two Iraqi oil ministry officials reported that oil transportation from Iraq's Kurdish region to Turkey would resume on Saturday. This development is expected to alleviate some of the supply concerns in the region. However, the overall impact on global oil prices remains to be seen, as the market continues to monitor geopolitical developments and their potential effects on supply and demand dynamics.