Oil prices rose on Thursday as robust U.S. fuel consumption data and expected falls in Russian supply later in the year offset concerns that a possible recession in developed economies could undercut demand.
Brent crude futures climbed $1.27, or 1.4 percent, to $94.92 a barrel by 1117 GMT. U.S. crude futures gained 93 cents, or 1.1 percent, to $89.04 a barrel.
Prices rose more than 1 percent during the previous session, although Brent at one point fell to its lowest level since February, as signs of a slowdown mounted in some places.
British consumer price inflation topped 10 percent in July, its highest since February 1982, intensifying a squeeze on households, while in China COVID-19 lockdowns and fuel export controls curbed demand.
Supporting prices, U.S. crude stocks fell by 7.1 million barrels in the week to Aug. 12, Energy Information Administration (EIA) data showed, against expectations for a 275,000-barrel drop, as exports hit 5 million barrels per day (bpd), the highest on record.
Bans by the European Union on Russian exports could dramatically tighten supply when curbs to seaborne crude and products imports into the bloc ramp up in the coming months and drive up prices, analysts warn.
“The EU embargoes will force Russia to shut in around 1.6 million barrels per day (bpd) of output by year-end, rising to 2 million bpd in 2023,” consultancy BCA research said in a note. “EU embargoes on Russian oil imports will significantly tighten markets and lift Brent to $119 a barrel by year-end.”
The market is also awaiting developments from talks to revive Iran’s 2015 nuclear deal with world powers, which could eventually lead to a boost in Iranian oil exports.
“We may be seeing traders taking a more cautious approach considering how close a decision on the Iran nuclear deal appears to be,” said Craig Erlam, senior market analyst at Oanda in London. “There remains plenty of doubt that it will get over the line but if it does, that could be the catalyst for another move lower.