Oil prices rose on Friday (September 26), on track for a weekly gain of more than 4%, as Ukraine's attack on Russian energy infrastructure prompted Moscow to restrict fuel exports.

Brent crude futures rose 89 cents, or 1.28%, to $70.31 a barrel at 9:46 a.m. CDT (14:46 GMT). U.S. West Texas Intermediate (WTI) crude rose $1.16, or 1.79%, to $66.14 a barrel.

"The market continues to focus on the situation between Russia and Ukraine," said John Kilduff, a partner at Again Capital. "These drone attacks by Ukraine are starting to have an impact." Both benchmark oil prices are expected to post their biggest gains since mid-June.

Russia will impose a partial ban on diesel exports until the end of the year and extend an existing ban on gasoline exports, Deputy Prime Minister Alexander Novak said on Thursday. A decline in refining capacity has left some Russian regions facing shortages of certain types of fuel.

NATO's warning of a response to further violations of member states' airspace has heightened tensions over the war in Ukraine and raised the possibility of additional sanctions against Russia's oil industry, said ANZ analyst Daniel Hynes.

On the supply side, crude oil exports are scheduled to resume on Saturday from Iraq's semi-autonomous Kurdistan region to Turkey, three sources familiar with the plans told Reuters. On the demand side, U.S. gross domestic product expanded at an upwardly revised 3.8% annual rate last quarter, the Commerce Department's Bureau of Economic Analysis said in its latest forecast on Thursday.

"If Russian supplies to China and India change, they will be looking for supplies," Kilduff said. "U.S. economic data is good. And with the Fed easing interest rates, that will contribute to demand." However, stronger-than-expected economic data could make the U.S. Federal Reserve more cautious about cutting interest rates after last week's 25 basis point cut, the first since December. (alg)

Source: Reuters