Oil prices experienced a sharp surge of over 1% on Friday following Russia’s decision to enforce a ban on the export of diesel and gas. Both West Texas Intermediate (CL=F) and Brent (BZ=F) futures soared, crossing the $90 and $94 per barrel thresholds, respectively. Moscow’s move is aimed at bolstering domestic supply and curbing internal prices.
This development comes at a pivotal juncture as gas and diesel prices in the United States have been gradually receding since their peak in 2023. According to the American Automobile Association (AAA), the national average for gas currently stands at $3.86 per gallon, with diesel holding steady at $4.58.
Although the European Union and the United States have largely already ceased importing Russian refined fuel due to its entanglement in the Ukraine conflict, experts caution that any reduction in the global oil supply will inevitably drive energy prices upward. Angie Gildea, KPMG’s US energy leader, emphasized that the impact on US prices is contingent on the duration of Russia’s embargo.
Tom Kloza, the global head of energy analysis at OPIS, also sounded a note of caution, suggesting that while US consumers might witness a decrease in gas prices, the scenario may vary in certain western states. Kloza posited that the US may have already surpassed the peak in gas prices, and further relief could be delivered by the availability of winter grade gasoline, which is more cost-effective to produce.
Additionally, a growing cohort of Wall Street analysts is anticipating oil prices to breach the $100 mark within the next 12 months, attributed to substantial output reductions imposed by OPEC+ and an uptick in global demand. Goldman Sachs recently adjusted their Brent forecast from $93 per barrel to a staggering $100 per barrel, owing to swifter inventory depletions resulting from heightened demand and diminished OPEC supply.
In summary, Russia’s export ban on diesel and gas is poised to exert a substantial influence on oil prices both in the United States and internationally. While consumers may find some relief in declining gas prices, there persists a possibility of sustained high prices in specific western states. Furthermore, industry analysts foresee a continued ascent in crude prices, with projections of breaching the $100 threshold within the next year.
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Source: Yahoo Finance