Oil prices edged lower on Thursday amid growing concerns over weakening global demand and the potential reimposition of U.S. tariffs, just ahead of an expected supply increase from major producers.

Brent crude futures slipped by 21 cents, or 0.3%, to $68.90 per barrel by 12:17 GMT. U.S. West Texas Intermediate (WTI) crude also fell 15 cents, or 0.2%, to $67.30 per barrel.

Both benchmarks had hit their highest levels in a week on Wednesday following Iran’s decision to suspend cooperation with the International Atomic Energy Agency—raising fears that the ongoing standoff over its nuclear program could escalate into a broader conflict.

A preliminary trade deal between the U.S. and Vietnam also supported prices temporarily.

However, market sentiment remained clouded by uncertainty over tariffs. The 90-day freeze on higher U.S. tariffs is set to expire on July 9, while key trade talks with partners such as the EU and Japan have yet to conclude.

In parallel, the OPEC+ alliance of oil producers is widely expected to agree on a supply hike of 411,000 barrels per day during its upcoming policy meeting this weekend.

Adding to the bearish tone, a private survey showed that activity in China’s services sector — the world's top oil importer — grew at its slowest pace in nine months in June, weighed down by weak domestic demand and falling export orders.

Further pressuring prices, U.S. crude inventories unexpectedly rose, stoking concerns over domestic demand in the world’s largest oil consumer.

The U.S. Energy Information Administration (EIA) reported a 3.8 million-barrel increase in crude stocks last week, bringing total inventories to 419 million barrels. Analysts surveyed by Reuters had expected a draw of 1.8 million barrels.

Markets are now awaiting the U.S. nonfarm payrolls report due later on Thursday, which could significantly influence the timing and extent of interest rate cuts by the Federal Reserve in the second half of the year.

Lower interest rates tend to stimulate economic activity, potentially boosting oil demand.

Gold prices declined on Thursday as the U.S. dollar strengthened against most major currencies and markets digested stronger-than-expected employment data.

According to figures released by the U.S. Bureau of Labor Statistics, the economy added 147,000 jobs in June—exceeding the Dow Jones forecast of 110,000. May’s figure was also revised upward to 144,000.

In a separate report, initial jobless claims fell by 4,000 to 233,000 in the week ending June 28, marking the lowest level since May 17. Analysts had expected a rise to 240,000.

Following the upbeat labor data, U.S. Treasury yields rose across the board. The two-year yield—considered most sensitive to monetary policy shifts—climbed 8.3 basis points to 3.872% by 4:27 p.m. Mecca time. The 10-year yield increased by 4.3 basis points to 4.336%, after hitting a session high of 4.364%, while the 30-year yield rose 2.6 basis points to 4.849%.

Adding to the data-driven sentiment, the ISM Services PMI came in at 50.8 for June, up from 49.9 in May, in line with market expectations—indicating modest expansion in the services sector.

Wall Street markets are scheduled to close early today ahead of the Independence Day holiday, with a full closure on Friday.

Meanwhile, the U.S. Dollar Index rose 0.4% to 97.1 by 6:16 p.m. GMT, after touching an intraday high of 97.4 and a low of 96.6.

Spot gold fell 0.5% to $3,344 per ounce at 6:17 p.m. GMT, weighed down by the stronger dollar and rising bond yields, which diminish the appeal of non-yielding assets like gold.

In 2024, according to official Russian data—if it can be trusted—the economy grew by 4.3%, outperforming all G7 nations. The UK managed just 1.1%, while the U.S. posted 2.8%.

This growth was largely driven by the Kremlin’s record military spending.

Russian oil exports remained relatively stable in volume as Moscow redirected shipments from Europe toward China and India. A fleet of hard-to-trace "shadow" tankers helped skirt sanctions from other countries.

Meanwhile, the ruble staged a dramatic recovery to become the world’s best-performing currency this year, gaining over 40%, according to Bank of America.

But as 2026 approaches, the broader tone is shifting.

Mounting Pressures

Inflation remains stubbornly high, interest rates have surged to 20%, and firms face an acute labor shortage. Globally, oil prices had declined earlier this year before being driven back up by the ongoing Israel-Iran conflict.

On Thursday, Russia’s economy minister warned that the country is "on the verge of recession" following a phase of "overheated economic activity," while some observers see signs of a looming collapse.

“Absolute Lies”?

But how realistic are these predictions—and what might they mean for the war?

Evgeny Nadorshin, a Moscow-based economist, told the BBC: "Broadly, it’s going to be an uncomfortable period through the end of 2026. We’ll certainly see some defaults and bankruptcies."

Still, he expects a "moderate" slowdown and calls talk of an outright collapse "an absolute lie."

"There’s no question," he added, "that the Russian economy has endured deeper recessions before."

Nadorshin points out that unemployment is at a historic low of 2.3%, and he expects it to peak at just 3.5% next year. For comparison, the UK’s unemployment rate was 4.6% in April.

Inflation and Labor Woes

Nevertheless, Nadorshin and others note growing areas of concern. Russia now appears to be entering a period of prolonged economic stagnation.

Inflation hit 9.9% year-on-year through April, driven in part by Western sanctions that raised import prices and by labor shortages that fueled wage hikes.

Russia’s Higher School of Economics estimates that by the end of 2024, the country lacked 2.6 million workers—mostly due to conscription and mass emigration.

In response, the central bank hiked interest rates to record highs to curb inflation. But this has made borrowing for investment increasingly difficult.

Energy Revenues Falling

At the same time, Russia’s oil and gas revenues have slumped under sanctions and lower global prices, falling 35% year-on-year in May, according to official data.

This has widened the budget deficit and forced the government to cut back on infrastructure and public service spending.

“They’ve got a massive military budget that’s untouchable,” said András Tóth-Czifra, a political analyst on Russian affairs. “So they’re redirecting money from crucial projects—roads, railways, utilities. And the quality of those services is already declining sharply.”

Tóth-Czifra notes that while Russia may have adapted to Western sanctions more than many anticipated, the long-term costs remain steep.

Russian companies struggle to import the technology they need. The auto industry is still reeling. And the EU has banned Russian coal imports and is phasing out its reliance on Russian gas by 2027.

"None of this will stop Russia from continuing the war in the short term," he added. "But it does constrain their economic capacity to grow or diversify in the long run."

Kremlin Response: “Macroeconomic Stability Is Obvious”

So far, Russian leadership has downplayed these risks. In early June, Kremlin spokesman Dmitry Peskov claimed that the economy’s "macroeconomic stability" and "core strength" were "obvious to everyone."

In April, he said Russia’s economy was "developing very successfully" thanks to government policies.

What Comes Next?

The outlook remains murky.

Should Russia and Ukraine reach a peace deal this year—a possibility that’s not off the table—it could ease some pressure on Moscow. Former President Donald Trump has said he would seek to normalize ties and even pursue new economic partnerships.

However, according to Dr. Katya Yafimova of the Oxford Institute for Energy Studies, Europe is unlikely to ease sanctions even if a peace deal is reached.

"Even if sanctions are lifted, Europe isn’t going back to Russian energy like before 2022," she said, "though some limited gas imports might resume."

Still, she concluded, "the economic picture on the horizon for Moscow is not bright. Re-routing oil exports away from Europe was one thing—but gas is far more complex."

Bottom Line: Regardless of how the war unfolds, its long-term economic toll on Russia is increasingly clear—and the Kremlin’s options for reversing it are narrowing.

US equity indices rose on Thursday after the release of employment figures that significantly exceeded analysts’ expectations.

Data from the Bureau of Labor Statistics showed that the US economy added around 147,000 jobs in June, well above the 110,000 forecast by Dow Jones. May’s figure was also revised upward to 144,000.

In a separate report, initial jobless claims fell by 4,000 to 233,000 for the week ending June 28 — the lowest level since May 17. Analysts had expected an increase to 240,000.

Following the strong jobs data, the yield on the 2-year US Treasury — which is highly sensitive to changes in monetary policy — rose by 8.3 basis points to 3.872% as of 4:27 p.m. Mecca time. The 10-year yield climbed by 4.3 basis points to 4.336%, after touching 4.364%, while the 30-year yield rose by 2.6 basis points to 4.849%.

Wall Street will close early today ahead of the Independence Day holiday, with US markets shut on Friday.

As for trading activity, the Dow Jones Industrial Average rose by 0.8% (375 points) to 44,855 as of 16:09 GMT. The broader S\&P 500 gained 0.8% (51 points) to 6,278, while the Nasdaq Composite climbed 0.9% (198 points) to 20,590.