Oil prices rose by more than 2 per cent on Friday owing to <a href="https://www.thenationalnews.com/business/energy/2022/07/01/libya-shuts-two-export-terminals-and-an-oilfield-amid-political-turmoil/" target="_blank">supply disruptions in Libya</a> and Opec+’s decision to <a href="https://www.thenationalnews.com/business/energy/2022/06/30/opec-sticks-to-crude-output-plans-for-august-amid-tight-supply-and-price-volatility/" target="_blank">stick to its planned output increase</a> in August even as recession fears linked to demand weigh on markets. Brent, the global benchmark for two thirds of the world's oil, was up<b> </b>2.38 per cent at $111.60 a barrel at the close of the trading session on Friday. West Texas Intermediate, the gauge that tracks US crude, closed<b> </b>2.52 per cent higher at $108.40 a barrel. Opec+ on Thursday agreed to increase production in August by 648,000 barrels per day, endorsing a plan announced earlier in June. “There was no commentary in the Opec+ statement about whether the production adjustment, the group’s name for its co-ordinated production policies, would extend beyond September as, in principle, the increase for August would unwind all of the cuts made by the group during the Covid-19 pandemic,” Edward Bell, senior director of market economics at Emirates NBD, said in a note. Opec and its allies are unwinding record output cuts of about 10 million bpd put in place in 2020. “The absence of any discussion of what happens once all the pandemic-related cuts [end] will be a concern for an oil market that is screaming out for additional barrels,” Mr Bell said. “Spot prices have come off since the start of June as financial markets generally price in an imminent global recession but time spreads, both in the futures and physical market, remain exceptionally tight.” The demand indicators for the second half of 2022 are “mixed” amid the easing of restrictions in China that could push demand higher and a slowdown of growth in the US that could hit oil demand, he said. “Even if there are broad downside risks to demand, we don’t think that they will outweigh the supportive factors for oil prices,” Mr Bell said. Supply disruption in Opec member Libya is also supporting oil prices. The North African country on Thursday said it shut down two of the country's biggest export terminals and an oilfield amid the political turmoil in the country, resulting in significant losses to its economy. “We’ve seen this movie before and a tight oil market and force majeure at key ports should provide underlying support for oil prices,” Edward Moya, senior market analyst at Oanda, said. Libya produced about 707,000 barrels of oil a day in May, down by 186,000 bpd from the previous month, according to Opec’s monthly oil market report based on secondary sources. The country is exempt from the Opec+ production deal because of security concerns. Libya’s oil production has “decreased and declined sharply” amid the political situation in the country, Mustafa Sanalla, chairman of Libya's National Oil Corporation, said. Meanwhile, a planned strike by oil and gas workers in Norway on July 5 could cut about 8 per cent of output, or 320,000 barrels of oil equivalent per day, unless an agreement is reached over wage demands, according to calculations by Reuters. Recession concerns are also growing amid inflationary pressures, monetary policy tightening by central banks and the impact of the pandemic and geopolitical tension. “Recession fears are killing the crude demand outlook, but with prices roughly 17 per cent lower from the March high, oil shouldn’t go much lower given the current supply outlook,” Mr Moya said. However, Norbert Rucker, head of economics and next-generation research at Julius Baer, expects the outlook for oil prices to remain tilted towards the downside. “We still believe that the price spikes are temporary, due to the combination of an extraordinary post-pandemic economic bounce and an exceptional geopolitical sentiment shock,” he said. “We see more downside to prices as the mood cycle ebbs and fundamentals ease. That said, market conditions remain prone to any further unforeseen additional supply shocks.”