Ukraine Strikes Prompt Russia Fuel Export Cut Pushing Oil Prices 4% Higher

Oil prices rose more than 4% this past week, marking their strongest weekly gains since mid-June, driven primarily by intensified Ukrainian drone strikes on Russian energy infrastructure that forced Moscow to restrict fuel exports and consider crude output cuts. Brent crude and U.S. West Texas Intermediate both hit their highest levels since early August amid tighter market conditions caused by Russia's partial ban on diesel exports and an extension of gasoline shipment bans, which have led to fuel shortages in several Russian regions. The rally was supported by a surprise drawdown in U.S. crude inventories, reflecting strong demand, though gains were tempered by concerns over future Federal Reserve interest rate cuts following stronger-than-expected U.S. economic growth. Geopolitical tensions remain elevated, with NATO warning Russia against airspace violations and the U.S. pressing international buyers to cease purchasing Russian crude, including diplomatic efforts by President Trump with Turkey and Hungary. Additionally, oil market dynamics are complicated by increased exports from Iraq's Kurdistan region and fresh U.S. tariffs that have dampened bullish momentum. Overall, the interplay of geopolitical conflicts, supply constraints, and economic factors is creating a volatile environment for oil prices.