Oil heads toward biggest weekly profit in three months as Russia cuts fuel exports

Oil prices rose on Friday, heading for weekly gains of more than 4%, after Ukrainian attacks on Russian energy infrastructure prompted Moscow to cut fuel exports.

Brent crude futures gained 13 cents, or 0.2%, to $69.55 a barrel by 09:10 GMT, while US West Texas Intermediate (WTI) rose 16 cents, or 0.3%, to $65.14.

Tamas Varga, an analyst at PVM, said: “The geopolitical risk premium, which had been building over the past two months as Ukraine intensified its drone attacks, has now translated into an actual supply shortfall, hurting Europe, which is structurally short of middle distillates.”

Both benchmarks are on track for their biggest weekly gains since mid-June.

Russian Deputy Prime Minister Alexander Novak announced on Thursday that Russia would impose a partial ban on diesel exports until the end of the year and extend the existing ban on gasoline exports.

Reduced refining capacity has already left several Russian regions facing shortages of certain fuel grades.

Daniel Hynes, an analyst at ANZ Bank, noted that NATO’s warning of a response to any further violations of its airspace has heightened tensions stemming from the war in Ukraine, raising the likelihood of additional sanctions on Russia’s oil industry.

On the supply side, two Iraqi oil ministry officials told Reuters on Thursday that oil flows from Iraq’s Kurdistan region to Turkey would resume on Saturday.

Capping some of the gains, the US Commerce Department reported that GDP rose at an upwardly revised annualized pace of 3.8% in the last quarter, according to the latest figures from the Bureau of Economic Analysis released Thursday.

Stronger-than-expected economic data could make the Federal Reserve more cautious about continuing to cut interest rates, after last week’s 25-basis-point reduction — its first since last December.