Following a session in which oil prices fell to their lowest levels since February, prices increased on Friday as concerns about a supply deficit outweighed worries about a slowdown in gasoline usage.

By 0630 GMT, Brent oil had increased by 55 cents, or 0.6 percent, to $94.67 per barrel, while U.S. West Texas Intermediate crude had increased by 65 cents, or 0.8 percent, to $89.19 per barrel. This week, the market worried about how inflation would affect demand and economic development, which put pressure on oil prices. However, indications of restricted supply helped to keep prices in check. ANZ Research analysts stated that OPEC’s meager supply rise underscores the market’s limited ability to tolerate additional shortages.

Will We See the Old Prices Ever Again?

OPEC+ intends to increase its daily target for oil production by 100,000 barrels in September. According to OPEC figures, the increase is one of the smallest since quotas in 1982. The world’s crude oil markets continued to be firmly in backwardation, a situation in which current prices are higher than those in upcoming months, signaling a lack of supply. With the European Union sanctions against seaborne imports of Russian crude and oil products slated to go into force on December 5, supply issues should increase as winter comes. The crucial question is whether Middle Eastern producers would reroute their barrels to Europe to cover the gap left by the EU’s suspension on seaborne Russian imports, according to RBC analyst Michael Tran.

One of the most important things to monitor for the rest of the year will be how this Russian oil sanctions policy plays out, noted Tran. Price growth was temporarily halted by indications of an economic downturn. Concerns about a recession have grown after the Bank of England warned of a protracted slump after raising interest rates by the greatest since 1995. If commodities are not pricing in an impending economic downturn, they may be getting ready for a period of “stagflation,” in which the jobless rate increases and inflation remains high, according to CMC Markets analyst Tina Teng.

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