Oil Prices Drop as Russia Modifies Fuel Export Ban
By Adedapo Adesanya
Oil prices moderated in choppy trade on Monday as Russia relaxed its fuel ban amid a widening demand worry.
Brent crude futures lost 2 cents during the session to trade at $93.29 per barrel, and the US West Texas Intermediate (WTI) crude depreciated by 35 cents to close at $89.68 per barrel.
Last week, prices were down after a hawkish Federal Reserve rattled global financial markets and raised concerns that interest rates could stay higher for longer affecting oil demand.
This snapped a three-week rally of more than 10 per cent after Saudi Arabia and Russia constrained supply by extending production cuts to the end of the year.
Last Thursday, Russia temporarily banned exports of gasoline and diesel to all countries outside a circle of four ex-Soviet states with immediate effect to stabilize the domestic fuel market.
It said the ban did not apply to fuel supplied under inter-governmental agreements to members of the Moscow-led Eurasian Economic Union, which includes Belarus, Kazakhstan, Armenia and Kyrgyzstan.
On Monday, the country approved changes to its fuel export ban, lifting restrictions for energy used as bunkering for some vessels and diesel with high sulphur content.
The indefinite Russian ban on all types of gasoline and high-quality diesel remains in place, according to the document dated September 23. Analysts expect it to be short-lived and completely lifted once the harvest is over next month.
According to reports, Russia has suffered shortages of petrol and diesel in recent months. Wholesale fuel prices have spiked, although retail prices are capped to try to curb them in line with official inflation.
Also, the market didn’t move despite a reported explosion at Iran’s southern refinery of Bandar Abbas on Monday.
Expectations of better economic data this week from China, the world’s largest crude importer, lifted sentiment.
Also, the market continues to worry about the projected increase in US interest rates to around 5.50-5.75 per cent by year-end which could dampen economic growth and overall fuel demand. The US Federal Reserve at a recent meeting maintained interest rates.