Oil is about to end 2022 on a high after a turbulent year marred by tight supplies

Oil prices rose on Friday and were on course for the second year in a row, albeit small, in a year marked by tight supplies due to conflict in Ukraine, a strong dollar and weak demand from China, the world’s biggest crude importer.

Brent crude futures were up 44 cents, or 0.5%, at $83.90 a barrel by 0138 GMT, after settling down 1.2% in the previous session.

US West Intermediate crude was $78.88 a barrel, up 48 cents, or 0.6 percent, after closing down 0.7 percent on Thursday.

Brent crude is expected to end 2022 with a gain of 5.76%, after rising 50.2% in 2021. Prices rose in March to a peak of $139.13 a barrel, a level not seen since 2008, after Russia invaded Ukraine and raised concerns about supplies and energy security.

WTI is on track to rise 4.5 percent in 2022 after gains of 55 percent in 2021.

Oil prices fell rapidly in the second half of this year as central banks around the world raised interest rates to fight inflation and the dollar’s rise. This made dollar-denominated commodities a more expensive investment for holders of other currencies.

China’s coronavirus restrictions, which were eased only in December, have also dashed hopes of a recovery in oil demand for the world’s second-largest crude consumer. While oil demand in China is set to recover in 2023, rising COVID-19 cases and fears of a global recession hamper commodity demand prospects.

In terms of supplies, Western sanctions will prompt Russia to divert more exports of crude and refined products from Europe to Asia.

In the United States, production growth slowed in the largest oil-producing countries, despite higher prices.