Lower Russian Oil Exports Drive Up Prices

Crude Oil and Gasoline Prices Rise Amid Geopolitical Tensions

Crude oil and gasoline prices are currently on the rise, with October WTI crude oil (CLV25) increasing by 0.85% to $93.74 per barrel, and October RBOB gasoline (RBV25) climbing by 1.20% to $2.93 per gallon. The increase in gasoline prices marks a one-week high, driven by several factors that are influencing the energy market.

One of the main contributors to the upward movement in energy prices is the weaker U.S. dollar, which makes oil more attractive for international buyers. Additionally, concerns over a potential decline in Russian oil exports have been boosting prices. Ukraine has intensified its drone attacks on Russian refineries, including the Kirishi refinery, which has an annual processing capacity of over 20 million tons. These attacks have led to reduced crude processing runs in Russia, with the first 27 days of August showing a monthly average of 5.09 million barrels per day (bpd), the lowest since 2020.

The S&P 500's recent rally to a new record high also signals confidence in the economic outlook, supporting energy demand and crude prices. However, this upward trend is being tempered by weaker-than-expected economic data from the U.S. and China. The U.S. September Empire manufacturing survey fell to -8.7, significantly below expectations of 5.0, while China’s August industrial production rose by only 5.2%, slightly under the expected 5.6%. Moreover, the Chinese jobless rate unexpectedly increased to 5.3%, indicating a weaker labor market than anticipated.

Global Supply and Demand Dynamics

A decrease in crude oil stored on tankers is another factor supporting current price levels. Vortexa reported that crude oil stored on stationary tankers dropped by 7.2% week-over-week to 67.96 million barrels as of September 12. This reduction suggests tighter global supply conditions.

Geopolitical tensions are also playing a key role in shaping the market. The ongoing conflict in Ukraine has raised concerns about additional sanctions on Russian energy exports, which could further tighten global oil supplies. President Trump recently expressed frustration with Russian President Putin, warning of potential new economic sanctions. Meanwhile, the U.S. proposed that G7 allies impose tariffs as high as 100% on purchases of Russian oil by China and India, aiming to pressure Russia to end the war.

In Europe, tensions escalated when Poland shot down Russian drones that crossed into its territory. In the Middle East, Israel launched a strike on Doha, Qatar, targeting Hamas leadership. This incident has raised fears of a broader regional conflict, given that the Middle East accounts for about one-third of global oil supplies.

OPEC+ Production Decisions

OPEC+ made a decision on September 7 to increase crude production by 137,000 bpd starting in October. This is a smaller increase compared to the 547,000 bpd boost in September and August. The group also indicated that the restart of the remaining 1.66 million bpd of idled production will depend on evolving market conditions.

Despite these adjustments, concerns about a potential global oil glut remain. The International Energy Agency (IEA) recently raised its 2026 global crude surplus estimate to 3.33 million bpd, up by 360,000 bpd from its previous forecast. This adjustment reflects OPEC+'s plans to revive production, which could lead to a gradual restoration of 2.2 million bpd by September 2026.

U.S. Inventory and Production Trends

Recent U.S. Energy Information Administration (EIA) data showed that crude oil inventories were 3.2% below the seasonal 5-year average as of September 5. Gasoline inventories were 0.6% below the average, while distillate inventories were 10.4% lower. U.S. crude oil production for the week ending September 5 rose to 13.495 million bpd, just below the record high of 13.631 million bpd set in December 2024.

Meanwhile, the number of active U.S. oil rigs, as reported by Baker Hughes, increased to 416 in the week ending September 12, marking a slight recovery from the 4-year low of 410 rigs recorded in August. Over the past 2.5 years, the number of oil rigs has declined sharply from a 5.5-year high of 627 rigs in December 2022.

Market Outlook and Investor Sentiment

With geopolitical risks continuing to influence the market, crude oil prices are likely to remain volatile. While current factors such as weaker dollar, reduced Russian exports, and rising geopolitical tensions support higher prices, concerns over global supply and weak economic data may limit further gains.

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