Oil resumed its breakneck rally on Thursday after Russia banned gasoline and diesel exports, further tightening an already stressed global fuel market.
(Bloomberg) — Oil resumed its breakneck rally on Thursday after Russia banned gasoline and diesel exports, further tightening an already stressed global fuel market.
The measures, designed to stabilize Russia’s domestic fuel prices, will remove supplies from the global diesel market at a time when refiners are struggling to meet demand. So far this year, Russia was the world’s single biggest seaborne exporter of diesel.
West Texas Intermediate rose above $90 a barrel while diesel futures soared as much as 4.6%. Prices had retreated earlier in the day, mirroring losses in other risk assets, after the Federal Reserve flagged that borrowing costs would likely stay higher for longer.
Russia’s export ban comes after its shipments of the fuel already were down by a third this month, which had helped push Europe’s diesel benchmark near to $130 a barrel this month.
Diesel “is once again taking charge to support a turnaround in oil,” said Ole Hansen, head of commodities strategy at Saxo Bank.
Crude has rallied strongly this quarter as Saudi Arabia and Russia extended their production curbs through the end of the year. A brightening outlook in the world’s two biggest economies — the US and China — has also bolstered prices and spurred commentators from Chevron Corp. to Goldman Sachs Group Inc. to float the possibility of oil advancing to $100 a barrel.
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