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LONDON: Oil prices slipped on Friday after two days of gains and are heading for weekly losses as a strong dollar and concerns about a global economic slowdown weigh amid soaring inflation rates.

Brent crude futures were down $1.99, or 2%, at $94.60 a barrel by 1122 GMT. U.S. West Texas Intermediate crude was at $88.67 a barrel, down $1.83, or 2%.

Both benchmark contracts were headed for weekly losses of around 3.6%.

A strong dollar has made oil more expensive for holders of other currencies, while equities, which often move in tandem with oil prices, also dropped.

In a sign of easing oil supply tightness, the price gap between prompt and second-month Brent futures narrowed by about $5 a barrel to under $1 from the end of July.

“Global recession and demand destruction are front and centre of current concerns given weak data out of the U.S., euro zone and China. Signs of slowing economic growth are pervasive and could dent oil demand,” PVM analysts said.

Brent oil may retest support at $91.90

Giving a floor to prices, U.S. crude inventories fell sharply as the nation exported a record 5 million barrels of oil a day in the most recent week, with oil companies finding demand from European nations looking to replace Russian crude.

Haitham Al Ghais, the new secretary general of the Organization of the Petroleum Exporting Countries, told Reuters he was optimistic about oil demand into 2023.

OPEC is keen to ensure Russia remains part of the OPEC+ group, Al Ghais said ahead of a Sept. 5 meeting.

Supplies could tighten again when European buyers start seeking alternative supplies to replace Russian oil ahead of European Union sanctions which take effect from Dec. 5.

“We calculate the EU will need to replace 1.2 million barrels per day of seaborne Russian crude imports with crude from other regions,” consultancy FGE said in a note.

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