Global oil prices soared by more than 1% on Friday as Russia implemented a ban on the export of diesel and gas. West Texas Intermediate (WTI) futures (CL=F) and Brent futures (BZ=F) both witnessed significant gains, crossing the $90 and $94 per barrel thresholds, respectively. This unprecedented move by Moscow is aimed at replenishing its domestic fuel supply and curbing surging domestic prices.
The timing of this export ban is crucial, occurring just as gas and diesel prices in the United States were gradually receding from their 2023 peaks. According to the American Automobile Association (AAA), the national average for gasoline currently stands at $3.86 per gallon, while diesel prices have reached $4.58 per gallon.
While the European Union and the United States had previously imposed bans on Russian refined fuel imports due to Russia’s involvement in the Ukraine conflict, experts warn that any reduction in global oil supply is likely to drive energy prices even higher. Angie Gildea, KPMG’s US energy leader, emphasized that the impact of Russia’s decision on US prices hinges on its duration. Tom Kloza, the global head of energy analysis at OPIS, cautioned that although US consumers may witness relief in gas prices, the situation may differ in specific western states. Kloza suggested that the United States might have already experienced the peak in gas prices and could see further reductions, particularly with the shift to more economical winter-grade gasoline production.
Moreover, a growing number of Wall Street analysts are anticipating oil prices reaching the $100 per barrel mark within the next 12 months. This projection is attributed to significant output cuts imposed by the OPEC+ alliance and a surge in global demand. Goldman Sachs, for example, recently revised their Brent crude oil forecast from $93 to $100 per barrel, citing faster inventory depletion driven by increased demand and reduced OPEC supply.
In summary, the sudden ban by Russia on diesel and gas exports is poised to have a substantial impact on oil prices both in the United States and globally. While consumers may experience some relief in gas prices, the situation in certain western states may remain precarious. Additionally, analysts foresee crude oil prices continuing to rise, with expectations of reaching the $100 per barrel milestone within the next year.
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Source: Yahoo finance
