November WTI crude oil (CLX25) on Friday closed up +0.74 (+1.14%), and November RBOB gasoline (RBX25) closed up +0.0341 (+1.74%).
Crude oil and gasoline prices rallied sharply on Friday, with crude posting a 1.75-month high. Concerns over crude supplies from Russia are boosting oil prices as President Trump presses countries to stop buying Russian crude in an attempt to push Russia to end its war in Ukraine. Friday’s weaker dollar was also bullish for crude prices, along with the better-than-expected US August personal spending report, which signals positive economic strength that is supportive of energy demand.
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In an attempt to get Russia to end its war in Ukraine, President Trump is lobbying countries to stop buying Russian crude, which could limit global supplies and is supportive for prices. Mr. Trump pressed Turkey to stop buying oil from Russia and said he will ask Hungary to do the same.
Escalation of Russian-NATO tensions is also boosting crude prices. European diplomats on Thursday said they are prepared to shoot down Russian aircraft if further airspace violations are detected.
Crude prices have support from concerns that the ongoing war in Ukraine could lead to additional sanctions on Russian energy exports, reducing global oil supplies. President Trump said he thought NATO nations should shoot down Russian aircraft that violated their airspace and reiterated the need for Europe to cut its energy purchases from Russia. The US proposed that the G7 allies impose tariffs as high as 100% on China and India for their purchases of Russian oil in an effort to convince Russia to end the war in Ukraine. In addition, Canadian Prime Minister Carney stated that he supports actions by Western allies to ramp up pressure on Russia through secondary sanctions on countries purchasing Russian oil.
Ukraine has stepped up its attacks on Russian refineries and oil infrastructure, which is bullish for crude prices as it curbs Russian crude exports and tightens global oil supplies. Last Thursday, Ukraine attacked Russia’s Salavat and Volograd oil refineries, halting around 300,000 bpd of refining capacity. Last Tuesday, Russia’s Transneft Pipeline, which handles more than 80% of the country’s oil, restricted the ability to store crude. Also, the Kirishi refinery, one of Russia’s biggest refineries that has an annual processing capacity of over 20 million tons, halted crude processing after damage caused by a Ukrainian drone attack. In addition, Ukrainian drone attacks have damaged Russian oil infrastructure and crude-exporting hubs along Russia’s Baltic Coast. Ukrainian drone and missile attacks on Russian refineries have curbed Russia’s total refined-product flows to 1.94 million bpd in the first fifteen days of September, the lowest monthly average in over 3.25 years.
The outlook for higher crude production in Iraq is expected to boost global oil supplies, which is bearish for crude prices. Iraq on Monday announced that it had reached an agreement with the regional government of Kurdistan to resume oil exports from the Kurdish region via a pipeline to Turkey,