Oil rises to $111 as Ukraine conflict continues and Iran talks offset supply fears

Oil prices rose marginally on Friday after a volatile week of trading, with crude prices jumping to multi-year highs during the week on worries about disruption to Russia’s exports.

Brent futures were up at US $110.78 a barrel at mid-day on Friday, while US West Texas Intermediate (WTI) crude was also up at US $108.35. Both benchmarks rose to multi-year highs during the week, with Brent soaring to $119.84, its highest since May 2012, and WTI hitting its highest since September 2008 at $116.57.

Global benchmark Brent has jumped nearly 25 percent since the Russian invasion of Ukraine started on February 24, and Brent’s six-month spread hit a record high of more than $21 a barrel, indicating very tight supplies.

According to Phil Flynn, an analyst at Price Futures Group, oil markets are in an “explosive mood” over increasing outrage against Russia. “People in the world don’t want to deal with a country that is committing these atrocities in Ukraine,” he told Reuters.

Following Russia's invasion of Ukraine, companies have rushed to shun Russian supply and scrambled for barrels elsewhere, while several energy giants have pulled out of Russian projects and investments. Russia produces between 4 to 5 million barrels of crude per day (bpd) – more than any other nation except Saudi Arabia.

The subdued prices on Friday reflected fresh hopes of the US and its allies reaching a new nuclear deal with Iran. According to officials, the United States and Iran have nearly completed negotiations on reviving the nuclear accord that could bring more than a million bpd of oil, or about 1 percent of global supply, back to the energy market.

“We are close to a possible deal,” Jalina Porter, the US State Department's principal deputy spokesperson, told media.

The update came a day after the Organisation of the Petroleum Exporting Countries (OPEC), Russia and their allies, stuck to an existing plan for a gradual output rise of 400,000 bpd a month.