Oil prices slipped on Aug. 19 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/bbl by 1122 GMT. WTI crude in the U.S. was at $88.67/bbl, 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/bbl to under $1 from the end of July.

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

Giving a floor to prices, U.S. crude inventories fell sharply as the nation exported a record 5 million bbl/d of oil 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 OPEC, 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 EU 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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