(Investing) – LONDON -Oil prices edged up on Friday, on track for a more than 4% weekly gain, as Ukraine’s attacks on Russia’s energy infrastructure prompted Moscow to curb fuel exports.
Brent futures gained 23 cents to $69.65 a barrel by 1255 GMT while U.S. West Texas Intermediate (WTI) crude rose by 33 cents at $65.31 a barrel.
“The geopolitical risk premium, which has been steadily building over the last two months as Ukrainian drone strikes intensified, has now materialised into an actual supply shortage, much to the detriment of Europe, which is structurally short of distillates,” said PVM analyst Tamas Varga.
Both benchmarks are set to register their biggest increases since mid-June.
Russia will introduce a partial ban on diesel exports until the end of the year and extend an existing ban on gasoline exports, Deputy Prime Minister Alexander Novak said on Thursday.
The drop in refining capacity has left several Russian regions facing shortages of certain grades of fuel.
NATO’s warning of a response to further violations of its airspace has ratcheted up tensions from the war in Ukraine and raised prospects of additional sanctions on Russia’s oil industry, said ANZ analyst Daniel Hynes.
On the supply side, crude oil exports from Iraq’s semi-autonomous Kurdistan region to Turkey were scheduled to resume on Saturday, three sources familiar with the plans told Reuters on Friday.
On the demand side, U.S. gross domestic product increased at an upwardly revised 3.8% annualised rate in the past quarter, the Commerce Department’s Bureau of Economic Analysis said in its latest estimate on Thursday.
Stronger than expected economic data could make the U.S. Federal Reserve more cautious about cutting interest rates after a cut of 25 basis points last week, its first since December.
