Dubai: Oil erased an earlier decline after Russia said it would ban gasoline and diesel exports from Thursday.
Brent futures traded little changed above $93 after earlier falling as much as 1.4 per cent. Diesel futures in Europe climbed as much as 3.9 per cent. The Russian measures are designed to stabilize the domestic fuel market, the government’s media office said, but they will also remove supply of fuel from the global diesel market at a time when refiners are struggling to make enough.
Crude prices were earlier lower as the Federal Reserve flagged that borrowing costs will likely stay higher for longer after one more increase this year, mirroring losses in other risk assets.
Russia’s plan for fuel exports could worsen current shortages on the global diesel markets, with its shipments of the fuel already down by a third this month. While speculation about a move to $100 crude has picked up this week, Europe’s diesel benchmark has been trading closer 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. That’s despite a stronger dollar and the “higher-for-longer narrative.”
Crude has rallied strongly this quarter as Saudi Arabia and Russia extended their production curbs to year-end. A brightening outlook in the world’s two biggest economies - the US and China - has also bolstered prospects for prices, with a growing pool of voices floating the possibility that $100 oil will return, including Chevron and Goldman Sachs Group.