Crude oil futures rise as Russia bans gasoline, diesel exports

Crude oil futures rose in midmorning Asia trade Sept. 22 after Russia introduced a ban on exports of diesel and gasoline, bringing tight supply concerns to the fore.

At 10:50 am Singapore time (0250 GMT), the ICE November Brent futures contract was up 65 cents/b (0.70%) from the previous close at $93.95/b while the NYMEX November light sweet crude contract rose 74 cents/b (0.83%) at $90.37/b.

"Crude prices were ready to continue pulling back but Russia's abrupt decision to impose a full ban on gasoline and diesel exports sent oil higher," Edward Moya, OANDA's senior market analyst, said in a Sept 22 note.

Russia has announced a ban on exports of diesel and gasoline, according to a government decree published Sept. 21.

The ban comes into effect immediately and includes finished grade gasoline as well as summer, intermediate and winter diesel grades, including gasoil.

The curb also includes volumes purchased on the exchange floor but excludes exports to countries within the Eurasian Economic Union that are under intergovernmental agreements.

The measure was aimed at stabilizing prices in the domestic market by helping to increase supply, the energy ministry said, adding it would also help stop gray exports.

"With diesel supplies tight and with Saudi Arabia and Russia using their energy dominance to respond to consuming nations using their reserves to try to control prices, it is now starting to take its toll as global oil inventories tighten," Phil Flynn, senior account executive at Price Futures Group, said in a late-Sept. 21 note.

Saudi Arabia's oil production reached a two-year low of 9 million b/d -- a level it expects to maintain until the end of 2023, S&P Global Commodity Insights reported earlier.

The production cuts have boosted prices, helping Russia deal with sanctions amid spiraling war costs and discounts on its crude.

Russia pledged Sept. 5 to cut 300,000 b/d of supply up to the end of 2023. Following this announcement, Saudi Arabia said it will extend a 1 million b/d voluntary oil products cut over the same period.

"The oil market just finished pricing in the extension of a 300,000 b/d oil export cut [by Russia], and now faces uncertainty as to how long this temporary ban [on Russian diesel and gasoline outflows] will last. A stronger dollar is limiting today's oil price rally," Moya added.

The ICE US Dollar Index was at 105.165 at 10:44 am Singapore time (0244 GMT) on Sept. 22, up 0.12% from the previous close.

Meanwhile, the next meeting of the committee that oversees the OPEC+ agreement is due Oct. 4.

A full OPEC+ ministerial meeting is scheduled for Nov. 26. There also is a provision to hold extraordinary meetings if necessary.

Dubai crude swaps and intermonth spreads were higher in midmorning Asia trade Sept. 22 from the previous close.

The November Dubai swap was pegged at $91.71/b at 10 am Singapore time (0200 GMT), up $1.02/b (1.12%) from the Sept. 21 Asian market close.

The October-November Dubai swap intermonth spread was pegged at $1.39/b at 10 am, widening 4 cents/b over the same period, and the November-December intermonth spread was pegged at $1.28/b, up 1 cent/b.

The November Brent-Dubai EFS was pegged at $1.81/b, up 2 cents/b.