Oil rises as tight market looks to Russian-Western diplomacy

Oil prices rose on Monday as fresh diplomatic efforts to resolve the Ukraine crisis provided some relief from supply concerns that have kept oil prices near $100 a barrel.

Brent crude futures were up $0.41, or 0.4%, at $93.95 a barrel at 1225 GMT. US West Texas Intermediate (WTI) crude futures rose $0.49, or 0.5%, to $91.56 a barrel.

French President Emmanuel Macron said on Monday that US President Joe Biden and Russian President Vladimir Putin have agreed in principle to a summit over Ukraine, but the Kremlin said there were no immediate plans for a meeting.  

US markets will be closed on Monday for the Presidents Day holiday.

"Energy could be clear collateral damage of a kinetic conflict between Russia and Ukraine," said Helima Croft, global head of commodity strategy at RBC.

European Commission President Ursula von der Leyen said Russia would be cut off from international financial markets and denied access to major exports needed to modernise its economy if it invaded Ukraine.  

Meanwhile, ministers of Arab oil-producing countries said on Sunday that OPEC+ should stick to its current agreement to add 400,000 barrels per day (bpd) of oil output each month, rejecting calls to pump more to ease pressure on prices.  

Price gains have also been limited by the possibility of more than 1 million bpd of Iranian crude returning to the market.

Iranian foreign ministry spokesperson Saeed Khatibzadeh said "significant progress" had been made in talks to revive Iran's 2015 nuclear agreement on Monday after a senior European Union official said on Friday that a deal was "very, very close".  

Analysts said the market remained tight and any addition of oil would help, but prices would remain volatile in the near term because Iranian crude is unlikely to return until later this year.

"If a Russian invasion takes place, as the US and UK have warned in recent days, Brent futures could spike above $100 per barrel, even if an Iranian deal is reached," Commonwealth Bank analyst Vivek Dhar said in a note.