Russia-Ukraine Conflict Remains Headline News for Energy Markets After 3 Years

Fuel prices are edging higher this week as geopolitical risks and shifting economic signals ripple through energy markets. WTI crude, which opened on Monday at $62.97 per barrel, has climbed 66 cents to over $63/bbl this morning. Diesel prices are also trending up, gaining more than ten cents per gallon compared to this time last week.

Ukraine has escalated its campaign of drone strikes on Russian refineries and export facilities, raising new concerns about potential supply disruptions. Recent attacks on the Kirishi refinery and Saratov plant have sidelined nearly 300,000 barrels per day of refining capacity. These outages, combined with sanctions pressure, have cut Russian diesel exports nearly in half over the past six months. Crude production has also slipped to 8.8 Mbpd-its lowest level since the pandemic-due to refinery downtime and storage congestion. Even so, the overall impact on global supply has been softened by steady demand from Asian buyers such as China and India, which continue to import Russian crude despite Western restrictions.

Sanctions remain one of the most divisive points for Western allies. U.S. Treasury officials have said Washington will not impose additional tariffs on China unless European countries match the move. The European Union, for its part, has delayed its latest sanctions package to align with G7 partners after President Trump urged stronger action. Japan has resisted U.S. pressure outright, pledging not to move beyond its existing trade commitments. While the West wants to tighten the screws on Russia, countries differ on how far they're willing to go, particularly when measures would also affect their relationships with China and India.

Trade analyses prove just how much has changed. Since 2022, EU exports to Russia have fallen 61% and imports have decreased 89%, flipping the trade deficit into a small surplus. Energy ties have been hit hardest. Russia, once the EU's largest oil supplier, accounted for nearly 29% of petroleum imports in 2021. By mid-2025, that share has collapsed to just 2%, largely due to EU bans on seaborne Russian crude. Yet despite these sharp declines, some Russian energy still reaches Europe, and both the U.S. and EU continue to import commodities like natural gas, uranium, nickel, and fertilizer.

Domestically, markets are turning attention to the Federal Reserve's upcoming September meeting, where an interest rate cut is widely expected. Lower borrowing costs generally lead to increased fuel demand by encouraging economic activity.