On Friday, November WTI crude oil (CLX25) closed up by +0.74 (+1.14%), while November RBOB gasoline (RBX25) saw an increase of +0.0341 (+1.74%).
Crude oil and gasoline prices experienced a significant rally on Friday, with crude reaching a 1.75-month high. Concerns regarding crude supplies from Russia are driving oil prices higher, particularly as President Trump urges countries to cease purchasing Russian crude in a bid to pressure Russia into ending its war in Ukraine. Additionally, a weaker dollar contributed to the bullish sentiment for crude prices, alongside a better-than-expected U.S. personal spending report for August, indicating robust economic strength that supports energy demand.
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In his efforts to persuade Russia to halt its military actions in Ukraine, President Trump is lobbying nations to stop buying Russian crude, which could restrict global supplies and support higher prices. He has specifically urged Turkey to cease its oil purchases from Russia and plans to make similar requests to Hungary.
The escalation of tensions between Russia and NATO is also contributing to rising crude prices. European diplomats indicated on Thursday that they are prepared to intercept Russian aircraft if further violations of airspace occur.
Concerns surrounding the ongoing war in Ukraine are bolstering crude prices, as potential additional sanctions on Russian energy exports could further diminish global oil supplies. President Trump has suggested that NATO nations should take action against Russian aircraft violating their airspace and has reiterated the necessity for Europe to reduce its energy purchases from Russia. The U.S. has proposed imposing tariffs as high as 100% on China and India for their purchases of Russian oil, aiming to incentivize Russia to end the conflict. Canadian Prime Minister Carney has also expressed support for increased pressure on Russia through secondary sanctions on nations buying Russian oil.
Ukraine has intensified its attacks on Russian refineries and oil infrastructure, which is bullish for crude prices as it restricts Russian crude exports and tightens global oil supplies. Recently, Ukraine targeted Russia’s Salavat and Volograd oil refineries, disrupting approximately 300,000 bpd of refining capacity. Furthermore, the Transneft Pipeline, which manages over 80% of Russia’s oil, has faced restrictions on crude storage. The Kirishi refinery, one of Russia’s largest, halted crude processing due to damage from a Ukrainian drone attack. Overall, Ukrainian drone and missile strikes have significantly impacted Russian oil infrastructure, leading to a decline in refined-product flows to 1.94 million bpd in early September, marking the lowest monthly average in over three years.
On the other hand, the outlook for increased crude production in Iraq could potentially boost global oil supplies, which is bearish for crude prices. Iraq recently announced an agreement with the Kurdish regional government to resume oil exports via a pipeline to Turkey, which had been halted for two years due to a payment dispute. Iraqi Foreign Minister Hussein indicated that this resumption could add 500,000 bpd of fresh oil supplies to the global market.
Additionally, reduced crude demand from India, the world’s third-largest crude oil importer, poses a negative outlook for oil prices, as India’s August crude imports fell by 2.9% year-on-year to 19.6 MMT.
Moreover, an increase in crude oil stored on tankers globally is bearish for oil prices. Vortexa reported a 14% week-on-week rise in crude oil stored on stationary tankers, reaching 74.18 million barrels as of September 19.
Crude prices found some support after OPEC+ agreed on September 7 to raise its crude production by 137,000 bpd starting in October. This increase is smaller than the 547,000 bpd rise seen in August and September. OPEC+ stated that the resumption of the remaining 1.66 million bpd of idled crude production will depend on evolving market conditions. The organization aims to gradually restore a total of 2.2 million bpd of production by September 2026, with OPEC’s August crude production rising by 400,000 bpd to 28.55 million bpd, the highest level in over two years.
According to Wednesday’s EIA report, U.S. crude oil inventories as of September 19 were 4.4% below the seasonal five-year average, while gasoline inventories were 1.7% below the seasonal average, and distillate inventories were 7.2% below the five-year average. U.S. crude oil production for the week ending September 19 rose by 0.1% week-on-week to 13.501 million bpd, slightly below the record high of 13.631 million bpd recorded in December 2024.
Baker Hughes reported that the number of active U.S. oil rigs increased by six to 424 rigs in the week ending September 26, remaining modestly above the four-year low of 410 rigs from August 1. Over the past 2.5 years, the number of U.S. oil rigs has sharply declined from the 5.5-year high of 627 rigs reported in December 2022.
On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes.
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