By Adedapo Adesanya
Brent crude futures surged by 2.8 per cent or $2.59 on Wednesday to the highest settlement in 2023 at $96.55 per barrel after a steep drop in crude stocks in the United States compounded worries of tighter global supplies.
The price of the US West Texas Intermediate crude futures (WTI) climbed by 3.6 per cent or $3.29 to $93.68 as the Energy Information Administration (EIA) reported a crude oil inventory draw of 2.2 million barrels for the week to September 22 in the country.
In the preceding week, the agency posted an inventory draw of 2.1 million barrels, which, in turn, followed a build of around 4 million barrels for the week before that.
The EIA report followed the American Petroleum Institute’s estimate, which showed a crude oil inventory draw of some 1.6 million barrels. More importantly, however, the API also estimated that stocks at Cushing, Oklahoma, had slipped to below 22 million barrels, which is on the brink of the minimum operating level for the hub.
The markets are already deep in worries about tight supplies heading into winter, following production cuts of 1.3 million barrels a day to the end of the year by Saudi Arabia and Russia of the Organization of the Petroleum Exporting Countries and allies (OPEC+).
More supply tightness is expected as Russian President Vladimir Putin ordered his government to ensure retail fuel prices stabilise after a jump caused by an increase in exports.
He ordered his government to make sure retail fuel prices stabilise and urged additional measures to balance the domestic market following the introduction of a ban on gasoline and diesel exports.
Mr Putin told the cabinet it needed to act swiftly and that reviewing oil industry taxes was an option.
The government last Thursday introduced a temporary ban on exports of gasoline and diesel to all countries beyond four ex-Soviet states to try to stem an increase in domestic fuel prices.
In response, his deputy prime minister, Mr Alexander Novak, cited proposals to restrict exports of oil products purchased for domestic use.
He said that there are proposals to restrict “grey” fuel exports, or the purchase of oil products initially meant for domestic use and exported instead for a higher price, and to raise fuel export duty.
The Russian government is also reconsidering a cut to damper payments, or subsidies to oil refineries, which began this month, he said.
