Oil prices rise amid supply concerns

Oil prices rose on Friday as concerns that a Russian ban on fuel exports could reduce global oil supplies outweighed concerns that another possible increase in US interest rates could negatively impact fuel demand.

According to Reuters, Brent crude futures rose 21 cents, or 0.2%, to $93.51 per barrel by 0103 GMT, while US West Texas Intermediate crude futures increased 23 cents, or 0.3%, to $89.86.

The two benchmark crude oil prices are heading for a slight weekly decline after rising by more than ten percent over the previous three weeks, amid concerns about global supply shortages as the Organization of the Petroleum Exporting Countries and its allies in the alliance known as OPEC+ continue production cuts.

Toshitaka Tazawa, an analyst at Fujitomi Securities, said, “Trading remained volatile amid varying effects of supply concerns reinforced by the Russian ban on fuel exports and fears of a slowdown in demand due to tightening monetary policies in the United States and Europe.”

On Thursday, the Russian government announced a temporary ban, with immediate effect, on the export of gasoline and diesel to all countries except four former Soviet countries, with the aim of achieving stability in the local fuel market.

The ban, which will force buyers of Russian fuel to look for it elsewhere, caused heating oil futures to rise by about 5% on Thursday.

On Wednesday, the Federal Reserve Bank (the US central bank) maintained interest rates, but stuck to its position on tightening monetary policy and expected an increase of a quarter of a percentage point before the end of the year.

This led to growing fears that higher interest rates could dampen economic growth and demand for fuel, while the US dollar rose to its highest levels since early March. The rise in the dollar makes oil and other commodities more expensive for buyers in other currencies.