World Oil Prices Surge as Russia Bans Fuel Exports

BySamson Ononeme

Sep 22, 2023 , ,
World Oil Prices Surge as Russia Bans Fuel Exports

Key Insights

  • Brent oil prices rose by 0.7% and WTI by 0.85% amid Russia’s ban on fuel exports.
  • Fears that the decision would undermine global supplies were stronger than worries about a possible decline in demand due to tightening financial policy in the United States and Europe, analysts say.

Global oil prices rose more than 0.5% amid concerns that a Russian export ban would disrupt global supplies, Reuters writes.

Brent oil futures on the morning of September 22 rose in price by 0.7% and reached $93.95 per barrel, according to trading data on the London ICE exchange. Futures for American West Texas Intermediate (WTI) oil rose in price by 0.85% to $90.38 per barrel.

As of 10:00 GMT, Brent oil rose in price by 0.525% to $93.79 per barrel, WTI oil by 0.64% (to $90.20).

Read also! Oil Price Surge: Will the Race to $100 Per Barrel Be Short-Lived?

Growing fears of a recession in the eurozone may continue to weigh on oil prices

Until September 22, the price of benchmark oil was on track for a slight weekly decline on news of tightening financial policy in the US and Europe and a possible slowdown in global demand due to this.

Now oil prices are rising as concerns about a possible supply disruption due to Moscow’s decision outweigh concerns about the prospects for a decline in demand, Reuters emphasizes.

Crude oil rebounded from session lows after Russia banned the export of diesel fuel, including gasoline. The move reversed the downward move in crude oil markets following Thursday’s hawkish Fed decision, said CMC Markets analyst Tina Teng. However, growing fears of a recession in the eurozone may continue to weigh on oil prices, she said.

Fujitomi Securities analyst Toshitaka told Reuters,

Trading remains volatile amid a tug-of-war between supply concerns, which have been exacerbated by Russia’s fuel export ban, and concerns about slowing demand due to monetary tightening in the US and Europe.

Read also! Russia Will Reduce Oil Exports in September by 300,000 Barrels Per Day

On September 21, Russia introduced temporary restrictions on the export of motor gasoline and diesel fuel in an attempt to saturate the domestic market and stabilize prices. On the same day, the US Federal Reserve kept interest rates at 5.25-5.5%, but did not rule out raising them to 5.50-5.75% by the end of the year.

The Bank of England also kept interest rates at 5.25%, but warned that contractionary monetary policy would continue for “quite a while.”

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