Oil Slides After Russia Bans Fuel Exports
By Adedapo Adesanya
Oil prices settled lower on Thursday even after Russia announced a ban on fuel exports, with Brent crude down by 23 cents to $93.30 a barrel while the US West Texas Intermediate crude (WTI) lost 3 cents to sell at $89.63 per barrel.
Russia temporarily banned gasoline and diesel exports to all countries outside a circle of four ex-Soviet states with immediate effect to stabilize the domestic fuel market, the government said on Thursday.
It said the ban did not apply to fuel supplied under inter-governmental agreements to Moscow-led Eurasian Economic Union members, including Belarus, Kazakhstan, Armenia and Kyrgyzstan.
The ban is indefinite, and further actions will depend on the saturation of the market, according to Russian First Deputy Energy Minister Pavel Sorokin.
“Temporary restrictions will help saturate the fuel market, which in turn will reduce prices for consumers,” the government said in a statement.
The shortfall, which will force Russia’s fuel buyers to shop elsewhere and while this didn’t reflect on oil prices, it caused heating oil futures to rise by nearly 5 per cent on Thursday.
The US Federal Reserve on Wednesday maintained interest rates but stiffened its hawkish stance, projecting a quarter-percentage-point increase to 5.50-5.75 per cent by year-end.
This development could dampen economic growth and overall fuel demand.
Also, The US Dollar surged to its highest since early March, making oil and other commodities more expensive for buyers using other currencies.
The Bank of England mirrored the US central bank and held interest rates on Thursday after a long run of hikes but said it was not taking a recent fall in inflation for granted.
The Swiss National Bank unexpectedly held rates steady, marking the first time the central bank has not hiked since March 2022, although it kept options open for further rate rises.
Meanwhile, Sweden’s Riksbank and Norway’s central bank both raised rates by 25 basis points, in line with expectations.
Despite these, the market remains supported by concern about tight supply globally entering the fourth quarter with the Organisation of the Petroleum Exporting Countries and allies (OPEC+) maintaining production cuts.