By Barani Krishnan

Investing.com — Oil prices mixed this week, as Brent showed a small weekly decline amid Europe’s continued rejection of a Russian oil ban. However, U.S. crude prices rose due to strong summer demand and tightness, which have driven pump prices up to new records.

Both Brent and U.S. crude’s West Texas Intermediate benchmark rose about 4% in Friday’s trade, extending their recovery from a near 10% loss in the first two days of the week sparked by fears that America might be tipped into recession from aggressive rate hikes by the trying to beat the worst inflation in 40 years.

London-traded barrels settled at $111.55/barrel, an increase of $4.10 or 3.8% over the previous day. The week was down 0.7%.

New York-traded traded settled at $110.49. That’s an increase of 4.1% or $4.36. The week’s gain was 0.7%.

The divergence between Brent and WTI is “a story of two oils,” said John Kilduff, partner at New York energy hedge fund Again Capital.

“The holdout on an European embargo of Russian oil, particularly by Hungary, is limiting Brent’s upside, while WTI is basking in bullish glory from the refining crunch in fuels that’s sent U.S. pump prices to record highs,” Kilduff said.

Friday’s comments by some European Union countries suggested that Russia oil ban should be delayed in order to prioritise other sanctions against Moscow. This is especially true if there was no immediate agreement from Budapest on an embargo.

Saudi Arabia’s Energy Minister Abdulaziz bin Salman, meanwhile, tried to avert any blame on OPEC+ for the record high pump prices in the United States, saying it was a lack of U.S. refining capacity that was responsible for the crisis rather than supply from the global oil exporters alliance.

OPEC+ has managed to push crude prices up from their lows whenever it meets each month, by offering a meager production hikes at well below the market’s needs.

“The bottleneck [in U.S. fuel supply]Get it now [has] to do with refining,” Abdulaziz told Bloomberg in an interview on Friday. “I did warn this was coming back in October. Over the past few years, many refineries around the globe, particularly in Europe and America, have shut down. The world is running out of energy capacity at all levels.”

The record-high fuel prices can be seen at US pump stations, where gasoline is at $4.50/gallon and diesel at $6.

On Thursday, the International Energy Agency warned that rising pump prices and slower economic growth will likely significantly slow down demand recovery throughout the rest of 2019 and 2023. 

According to economists, the US could fall back on its path of resilience following the devastating coronavirus pandemic that lasted two years. This is despite record fuel prices and Fed rate increases.