Russia Extends Diesel Export Ban, Boosting Crude Oil Prices Amid Global Disruptions

Crude oil prices surged on Wednesday after Russia extended its diesel export ban through October, further tightening global markets. The move was seen as a bullish factor for crude oil prices, which rose by 1.16% to $93.05 per barrel. November WTI crude oil (CLX26) closed up +1.04 (+1.16%) on Wednesday.

The rally in crude oil prices was also driven by the extension of the US-Iran war, which continues to disrupt global oil supplies. The Strait of Hormuz remains a major concern for oil traders, with attacks on vessels transiting the strait continuing unabated. Saudi Arabia has pivoted to the Red Sea to export most of its oil over the past two months, but escalating tensions with Houthi rebels in Yemen have disrupted that route.

The International Energy Agency (IEA) warned earlier this month that high oil prices and restricted supply will cause the biggest drop in global oil demand this year since the Covid-19 pandemic. The IEA raised its estimate for this year's global oil deficit to 1.7 million bpd from last month's 1.3 million bpd estimate due to the restricted supply caused by the US-Iran war.

OPEC delegates approved their final increase of +188,000 bpd in crude production for September, but the planned OPEC+ production increases may be difficult to achieve amid persistent US-Iran military attacks in the region. The extension of Russia's diesel export ban through October is expected to further tighten global markets and support higher crude oil prices.