Crude values pare gains amid recession fears

Front-month ICE Brent has come down by $1.20/bbl on the day, to $94.35/bbl at 09.00 GMT.

PHOTO: Global oil demand could take a hit from recessions and lower economic activity. Getty Images

Upward pressure:

OPEC+ agreed to decrease production by 100,000 b/d in October, citing the "adverse impact of volatility and a decline in liquidity.”

Crude prices are likely to rise on the back of Europe's deepening energy crisis, as natural gas flows through Russia's Nord Stream 1 pipeline has been suspended indefinitely. 

A US-Iran now looks more uncertain. EU chief negotiator Joseph Borell said the deal is "in danger" will likely increase crude prices. Borell said he was "less confident" about the convergence of the negotiation process and the prospect of closing the deal.

In response to a price cap imposed by the G7 nations on Russian oil exports, Russian energy minister Nikolai Shulginov said Russia would ship more oil to Asia. 

Downward pressure:

Renewed lockdowns in China ahead of the Chinese Communist party’s 20th Congress are expected to weigh on oil demand from the world's biggest importer. As many as 33 cities in China are under “semi-lockdowns” under the government’s “zero-Covid” policy.

Soaring inflation in the US and Eurozone, the energy crisis in Europe and China’s weak economic data have sparked fears of a looming global recession.

Deutsche Bank predicts a recession for the US early next year, while Royal Bank of Canada’s Peter Schaffrik sees the Eurozone "enjoying" a longer, three-quarter recession.

By Konica Bhatt

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