Oil prices nearly flat as Russia eases fuel export ban

NEW YORK – Oil prices were nearly flat in choppy trade on Monday as Russia relaxed its fuel ban, after earlier gains on a tighter supply outlook, while investors eyed elevated interest rates that could curb demand.

Brent crude futures were flat at $93.27 a barrel by 1:04 p.m. EDT (1704 GMT).

U.S. West Texas Intermediate crude was down 25 cents at $89.78.

Russia approved some changes to its fuel export ban, lifting the restrictions for fuel used as bunkering for some vessels and diesel with high sulphur content, a government document showed on Monday.

The export ban on all types of gasoline and high-quality diesel, announced last Thursday, remains in place.

“The market continues to digest Russia’s temporary ban on diesel and gasoline exports into an already tight market, offset with the Fed’s hawkish message that rates will stay higher for longer,” said Tony Sycamore, an analyst at IG Markets.
Crude prices fell last week after a hawkish Federal Reserve rattled global financial markets and raised concerns over oil demand. That snapped a three-week rally of more than 10% after Saudi Arabia and Russia constrained supply by extending production cuts to the end of the year.Last week, Moscow issued a temporary ban on gasoline and diesel exports to most countries to stabilise the domestic market, fanning concerns of low products supply as the Northern Hemisphere heads into winter.

Also weighing on oil prices, the U.S. dollar index strengthened on Monday to its highest level since November 2022. A stronger greenback makes U.S. dollar-priced oil more expensive for holders of other currencies, curtailing demand.

“We seem to have risk-off sentiment because of strength in the dollar,” Price Futures Group analyst Phil Flynn said.

On the supply side, the number of operating oil rigs in the U.S. fell by eight to 507 last week – the lowest count since February 2022 – despite higher prices, a weekly report from Baker Hughes showed on Friday.

Compounding supply constraints, U.S. oil refiners are expected to have about 1.7 million barrels per day (bpd) of capacity offline for the week ending Sept. 29, decreasing available refining capacity by 324,000 bpd, research company IIR Energy said on Monday.

Offline capacity is expected to rise to 1.9 million bpd in the week ending Oct. 6, IIR added.

In Iran, an explosion was reported on Monday at Iran’s southern refinery of Bandar Abbas, according to the official IRNA news agency, following a gas leak.

Expectations of better economic data this week from China, the world’s largest crude importer, lifted sentiment. However, analysts flagged that oil prices face technical resistance at the November 2022 highs reached hit last week.

China’s manufacturing sector is expected to expand in September, with the purchasing manufacturing index forecast to rise above 50 for the first time since March, Goldman Sachs analysts said.