Oil Prices Reach Multi-Month Highs as Ukraine Drone Attacks Disrupt Russian Energy Exports and US Data Influences Demand Outlook
Oil prices increased on Friday, reaching levels not seen in months, amid Ukrainian drone strikes targeting Russian energy infrastructure, which have hindered fuel exports. Brent crude closed at $70.13 per barrel, up 71 cents (1.02%), while US West Texas Intermediate (WTI) finished at $65.72, up 74 cents (1.14%). Both benchmarks are on track for their strongest weekly gains since mid-June.
Market focus continues to be on the ongoing conflict, with John Kilduff of Again Capital noting that repeated Ukrainian attacks are “adding up.” Russia has responded by imposing a partial diesel export ban through the end of the year and extending its existing gasoline export restrictions, as confirmed by Deputy Prime Minister Alexander Novak on Thursday. These measures, coupled with refinery outages, have led to regional shortages.
Additional support for oil prices comes from US policy actions. According to Andrew Lipow of Lipow Oil Associates, President Trump has been urging allies to cut Russian fuel imports, which could lead countries like India and Turkey to reduce their purchases. Meanwhile, NATO’s warnings about potential retaliation for airspace violations have increased the likelihood of further sanctions targeting Moscow’s oil industry, said ANZ analyst Daniel Hynes.
In supply developments, Iraq’s Kurdistan region will restart crude shipments to Turkey’s Ceyhan port on Saturday, according to state marketer SOMO. Traders are closely watching Kurdish production levels for potential impacts on global supply.
On the demand side, US GDP grew at an annualized rate of 3.8% in the last quarter, as reported by the Commerce Department on Thursday. Kilduff pointed out that shifts in Russian oil to China and India could trigger additional buying, and the combination of steady US growth with potential Federal Reserve rate cuts could support sustained demand.
However, stronger-than-expected economic data might lead the Fed to pause or slow its rate reductions, following its initial 25-basis-point cut last week since December.