Brent oil slipped on Tuesday as concerns of a possible global recession curtailing demand outweighed supply disruption fears, highlighted by an expected production cut in Norway.
Brent crude was $1.33, or 1.2%, lower at $112.17 a barrel by 1231 GMT, while U.S. West Texas Intermediate (WTI) crude rose 30 cents, or 0.3%, to $108.73 a barrel from Friday’s close. There was no settlement for WTI on Monday because of the U.S. Independence Day public holiday.
Investors are becoming more concerned as the latest surge in gas and fuel prices adds to worries about recession.
“Oil is still struggling to break out from its current recessionary malaise as the market pivots away from inflation to economic despair,” Stephen Innes of SPI Asset Management wrote.
In the euro zone, data showed business growth across the bloc slowed further last month, with forward-looking indicators suggesting the region could slip into decline this quarter as the cost of living crisis keeps consumers wary.
And in South Korea, inflation hit a near 24-year high in June, adding to concerns of slowing economic growth and oil demand.
Yet supply concerns still linger and earlier in the session WTI rose more than $3 and Brent more than $1 on potential output disruption in Norway, where offshore workers began a strike that will hit output.
The strike is expected to reduce oil and gas output by 89,000 barrels of oil equivalent per day (boepd), of which gas output makes up 27,500 boepd, Norwegian producer Equinor has said.
“Oil prices are … benefiting from the strike in Norway, so far impacting only modest volumes, and the sharp increase in Saudi official selling prices for August, suggesting that Saudi exports might not increase that much next month,” UBS analyst Giovanni Staunovo said.
Saudi Arabia, the world’s top oil exporter, raised August crude oil prices for Asian buyers to near record levels amid tight supply and robust demand.
Meanwhile, Russia’s former president Dmitry Medvedev said on Tuesday a reported proposal from Japan to cap the price of Russian oil at around half its current level would lead to significantly less oil on the market and could push prices above $300-$400 a barrel.
G7 leaders agreed last week to explore the feasibility of introducing temporary import price caps on Russian fossil fuels, including oil, in an attempt to limit resources to finance Moscow’s “special military operation” in Ukraine.
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