Oil market fundamentals in a precarious balance as supply risks, global recession lurks

GLOBAL energy markets seem to be moving one step forward and another step back amid the ensuing volatility in crude oil prices, with Dated Brent hovering around $110/b at present. Tight supply-side fundamentals, reflecting low commercially available stocks, and restricted spare capacity are tempering the impact of a recession-induced demand destruction in economies grappling with a weakening outlook amid mounting inflationary pressures.

The G7 meeting last month added an element of uncertainty in an already volatile market, as its leaders gave mixed signals on a proposed international price cap for Russian oil prices in response to the war in Ukraine.