Crude oil futures closed the week higher on Friday, lifted by a tangle of geopolitical shocks that tightened supply from major producers even as trade tensions and demand worries limited the rally. Benchmark Brent gained 1.02 percent, settling at US $70.13 a barrel on the ICE exchange, while West Texas Intermediate rose 1.14 percent to US $65.72 on Nymex. Both benchmarks advanced more than four percent for the week, with Brent holding the psychological US $70 mark and WTI clearing key resistance levels.
Traders cited a potent mix of drivers. Russia extended a ban on diesel exports and maintained gasoline restrictions after Ukrainian drone attacks disrupted refineries, pipelines, and storage sites, adding fresh strain to global fuel flows. U.S. crude inventories posted an unexpected draw, and product stocks fell for a second week, reinforcing the sense of tightening supply. Yet the U.S. dollar’s strength, the prospect of renewed Kurdish exports, and stronger-than-expected American GDP growth tempered the upside by clouding the outlook for Federal Reserve rate cuts.
Russia’s fuel export curbs are sharpening the market’s focus on European security. NATO warned that a response cannot be ruled out after reports of a Russian drone crossing into Polish airspace, while Washington and Brussels tightened sanctions and price caps. The supply squeeze comes as former President Donald Trump’s sweeping tariffs and penalties on Russian oil—now totaling 50 percent—continue to reverberate through global trade.
The pressure has spilled into U.S.–India relations. As New Delhi sought relief on imports from Venezuela and Iran to offset Russian losses, visiting American officials warned that progress on a U.S.–India trade deal hinges on India reducing purchases of Russian crude. Indian officials countered that the West is still buying Russian goods while urging others to abstain, underscoring a widening rift over energy policy and strategic autonomy.
Meanwhile, the OPEC+ alliance is struggling to meet its promised production increases. After months of voluntary cuts, the group has delivered only about three-quarters of its targeted output hike, leaving a half-million-barrel-per-day shortfall as capacity limits and compensatory reductions bite. Iraq’s semi-autonomous Kurdistan region is preparing to restart exports through Turkey’s Ceyhan port, but disputes over debt repayment have delayed flows, adding to the market’s uncertainty.
In the United States, commercial crude inventories fell by 607,000 barrels in the week ended September 18, defying forecasts for a build and marking another sign of tightening supply. Gasoline and distillate stocks also slipped, pushing total gasoline inventories one percent below the five-year average. At the same time, the first U.S. imports of Venezuelan crude in more than three months arrived under a new restricted license, though Chevron warned that shipments will remain well below past levels.
An upward revision in U.S. second-quarter GDP growth to 3.8 percent further complicated the outlook, raising questions about the pace of future Fed rate cuts. Analysts say the competing forces of robust demand signals, constrained supply, and persistent macroeconomic headwinds are likely to keep crude prices range-bound in the near term, even as the market remains alert to the next geopolitical shock that could break the stalemate.
