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NEW YORK (Reuters) – Oil prices gave up early gains on Wednesday as the rising dollar and fears of a global recession offset worries about a Russian military mobilization.

A sharp increase in US crude inventories could also weaken oil prices. Analysts forecast U.S. crude inventories rose 2.2 million barrels last week.

On Tuesday, data from the American Petroleum Institute industry group showed crude inventories rose 1.0 million barrels in the week to September 16.

Brent crude futures were down 10 cents, or 0.1%, at $90.52 a barrel at 10:13 a.m. EDT (1413 GMT), while U.S. West Texas Intermediate crude fell 28 cents, or 0.3%, to $83.66.

Both contracts rose over $2 earlier in the session.

Putin said he had signed a decree on partial mobilization, saying he was defending Russian territories and that the West wanted to destroy the country.

“The oil complex (went up) largely on Putin’s apparent escalation of the war in Ukraine,” analysts at energy consultancy Ritterbusch and Associates said, noting that the dollar’s strength and expected rise US interest rates will limit oil price gains.

Oil prices hit a multi-year high in March following the outbreak of war in Ukraine. EU sanctions banning maritime imports of Russian crude will come into effect on December 5.

This week, investors braced for another aggressive interest rate hike from the US Federal Reserve which they believe could lead to a recession and a fall in fuel demand.

The Fed is widely expected to raise rates by 75 basis points for the third consecutive time later Wednesday in its bid to contain inflation.

The dollar was on course for its highest close against a basket of other currencies in over 20 years. A strong dollar reduces oil demand by making fuel more expensive for buyers using other currencies.

Signs of a pick-up in Chinese demand, hit by COVID-19 shutdowns, had also helped push prices higher earlier in the session.

At least three Chinese state oil refineries and a private mega-refiner plan to increase throughputs by up to 10% in October from September, pricing in stronger demand and a possible increase in fuel exports in the fourth quarter , said people familiar with the matter.

Meanwhile, the United States has said it does not expect a breakthrough on reviving the 2015 Iran nuclear deal at the United Nations General Assembly this week, dampening the outlook for a return of Iranian barrels to the international market.

Producer group OPEC+ – the Organization of the Petroleum Exporting Countries and its associates, including Russia – is now down a record 3.58 million barrels per day from its production targets of around 3 .5% of global demand. The shortfall highlights the underlying tightness of supply in the market.

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