Oil Prices Hold Near Seven-Week High on Russian Supply Risks and U.S. Inventory Drop

Oil prices extended their rally in Asian trading on Friday, maintaining levels above a seven-week high and positioning for a strong weekly gain. The surge comes as concerns mount over Russian supply disruptions alongside an unexpected decline in U.S. crude inventories, both of which have tightened the market outlook.

As of 21:08 ET (01:08 GMT), Brent crude futures for November delivery edged up 0.3% to $69.63 per barrel, while West Texas Intermediate (WTI) futures rose 0.4% to $65.25 per barrel. Both benchmarks remain at their highest since early August and are on track for a weekly rise of more than 4%.

Russia announced partial restrictions on diesel exports and extended its gasoline export ban until the end of 2025 to secure domestic fuel supplies. Meanwhile, Ukrainian drone strikes have targeted Russian energy facilities in Bryansk, Samara, and Bashkortostan, disrupting refinery operations and intensifying fears over reduced export capacity. Added pressure comes from Washington and its allies, who are considering new sanctions on Moscow, potentially curbing Russian crude and diesel exports further.

On the demand side, U.S. government data confirmed a notable draw in crude inventories. The Energy Information Administration reported a decline, echoing earlier figures from the American Petroleum Institute that estimated a 3.8 million barrel drop for the week ending September 19. This tightening supply-demand balance provided fresh support for oil prices.

However, broader economic concerns limited gains. President Donald Trump announced new tariffs on key imports, including a 100% duty on branded pharmaceuticals, 25% on heavy-duty trucks, and 50% on kitchen cabinets. Analysts warned that higher costs in the transport sector could dampen diesel demand.

Additionally, stronger-than-expected U.S. GDP growth has added uncertainty around Federal Reserve interest rate cuts. With tighter monetary policy weighing on fuel consumption, traders are closely watching the upcoming release of the Fed’s preferred inflation gauge, the PCE price index, for further signals.

At present, supply risks from Russia, coupled with U.S. inventory declines, continue to underpin bullish momentum, though trade tensions and monetary policy remain key headwinds.