Oil Prices Maintain Gains Amid Rising Tensions with Russia and Supply Risks

SadaNews - Oil prices extended their gains, reaching their highest level in a week, after U.S. President Donald Trump escalated his rhetoric against Russia, while traders awaited any potential supply disruptions from an OPEC+ member.

Brent crude rose towards $68 per barrel after climbing 1.6% on Tuesday, while West Texas Intermediate hovered near $64. Trump stated that NATO countries should shoot down Russian planes if they violate their airspace, and he appeared more sympathetic to Ukraine's chances of winning the war. He renewed his call for Europe to reduce its energy purchases from Russia.

In his speech at the United Nations General Assembly in New York, Trump said: "China and India are the main funders of the ongoing war by continuing to buy Russian oil. However, it is unacceptable that NATO countries themselves have not yet stopped importing large amounts of energy and Russian products."

Meanwhile, Russia is considering imposing restrictions on diesel exports for some companies following a series of Ukrainian drone attacks that targeted its energy infrastructure, including pipeline facilities. Russian supply has become a focal point amid global efforts to pressure Moscow to come to the negotiating table.

Mukesh Saha, the founder and CEO of analysis company "Xanalysts" in Sydney, stated that any reduction in Russian diesel exports would be "positive for crude", as it would mean that refineries in other parts of the world would have to ramp up their operations to balance the market, especially in the winter when fuel demand peaks. He added: "Prices for products will start to rise first, which will later lead to an increase in crude prices."

Diesel prices (Gasoil) in Europe rose by 2.4% on Tuesday, marking the largest gain in three weeks.

Overall, oil prices remained relatively stable this month as traders balanced negative fundamentals with ongoing geopolitical tensions. On the supply side, Iraq is nearing completion of an agreement to resume crude exports from the Kurdistan region after a two-year halt, which could bring back about 230,000 barrels per day to the global market, increasing the likelihood of an oversupply situation.

In the United States, an industry report indicated that crude inventories fell by 3.8 million barrels last week, despite a rise in distillate inventories. Official data is set to be released on Wednesday.

Some market indicators suggest signs of strength; the price spread of Brent between the two nearest contracts reached about 66 cents per barrel in backwardation, double its level two weeks ago. The spread between the front-month December contracts widened to $1.48 per barrel compared to less than $1 two weeks ago.