Oil eased off yearly highs, capping a tumultuous week that saw the U.S. Federal Reserve flagging a further rate hike and Russia banning diesel exports.

While Russia’s announcement of a temporary ban on gasoline and diesel exports has tightened an already stressed global fuel market, signals that the Federal Reserve will keep borrowing costs higher for longer have cooled oil’s rally. West Texas Intermediate is now poised for the first weekly loss in a month, after reaching the highest level this year.

Still, crude has surged this quarter as Saudi Arabia and Russia extended their production curbs through the end of the year. The outlook for demand has also improved, with refiners in China, the world’s largest oil importer, ramping up processing to a record. That backdrop has prompted firms from Chevron Corp. to Goldman Sachs Group Inc. to make the case for a return of US$100 oil.

Despite fluctuations in futures prices, there are plenty of signs of tightness in the physical market. Russia’s temporary refined ban lifted fuel prices, while another decline in U.S. stockpiles led to timespreads widening further in backwardation, pointing to strong competition for near-term supplies.

Prices:

• WTI for November delivery rose 1.1 per cent to $90.62 a barrel at 10:42 a.m. in New York
• Brent for November settlement added 0.79 per cent to $94.04

In the Middle East, U.S. officials met with Iraqi Prime Minister Mohammed Shia Al-Sudani for talks, and emphasized the urgency of reopening an Iraq-Turkey crude pipeline as soon as possible, the White House said.