LONDON — Oil prices were stable on Monday, struggling to reverse last week’s losses as the market balanced tightening supplies with concerns about slowing global economic growth.
Brent crude futures were down 38 cents, or 0.3%, at $112.74 a barrel by 1022 GMT. Front-month prices tumbled 7.3% last week, their first weekly fall in five.
U.S. West Texas Intermediate crude was at $109.38 a barrel, down 18 cents, or 0.2%. Front-month prices dropped 9.2% last week, the first decline in eight weeks.
“Friday’s steep price fall can be seen as a delayed reaction to the concerns about recession that have already been weighing on the prices of other commodities for some time,” said Commerzbank analyst Carsten Fritsch.
Analysts and investors said they believe a recession is more likely after the U.S. Federal Reserve approved on Wednesday the largest interest rate increase in more than a quarter of a century to stem a surge in inflation.
Similar tightening approaches by the Bank of England and Swiss National Bank last week ensued.
Brent crude futures on Monday touched their lowest in a month, but some analysts expect the slump to be short-lived.
“Supplies will remain tight and continue supporting high oil prices. The norm for ICE Brent is still around the $120/bbl mark,” PVM analyst Stephen Brennock said.
Western sanctions have reduced access to oil from Russia following its invasion of Ukraine, which Russia calls a “special operation.”
While China’s crude oil imports from Russia in May soared 55% from a year earlier to a record level, displacing Saudi Arabia as the top supplier, the country’s export quotas have resulted in declining oil product shipments.
Tight refined products markets have supported oil prices.
Analysts expect limited summer increases from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, known as OPEC+.
Libya’s oil production has remained volatile following blockades by groups in the country’s east, with its output most recently pegged at 700,000 per day.
And the prospects of Iranian sanctions relief – which could result in a meaningful increase in the country’s crude exports – are dwindling.
Tight supply has seen some mitigation from the release of strategic petroleum reserves, led by the United States, where production is also climbing, according to rig count data from energy services firm Baker Hughes Co. (Additional reporting by Florence Tan and Isabel Kua in Singapore; Editing by Jan Harvey)