Oil rises above $112 as Ukraine conflict offsets Iran supply hope

Oil rose above $112 a barrel on Friday in a volatile session as fears over disruption to Russian oil exports in the face of Western sanctions offset the prospect of more Iranian supplies in the event of a nuclear deal with Tehran.

Signs of an escalation in the Russia-Ukraine conflict, with reports of a fire at a Ukrainian nuclear power plant, spooked markets before authorities said the fire in a building identified as a training centre had been extinguished.  

Brent crude rose as high as $114.23 a barrel and by 1050 GMT was up $1.97, or 1.8%, at $112.43. US West Texas Intermediate (WTI) added $2.21, or 2.1%, to $109.88 after touching a high of $112.84.

"Russia's invasion of Ukraine means that fears over supply will remain front and centre," said Stephen Brennock of oil broker PVM, though he added that there is "a new sense of urgency" to revive the Iranian nuclear deal.

Crude oil hit its highest in a decade this week and prices are set to post their strongest weekly gains since the middle of 2020, with the US benchmark up more than 18% and Brent 13%.

On Thursday prices swung in a $10 range but settled lower for the first time in four sessions as investors focused on the revival of the Iran nuclear deal, which is expected to boost Iranian oil exports and ease tight supplies.  

Still, Iran's Foreign Minister Hossein Amirabdollahian said on Friday that the west's "haste" to reach a nuclear agreement "cannot prevent the observance of Iran's red lines", including economic guarantees.  

Oil prices are rising on fears that western sanctions over the Ukraine conflict will disrupt shipments from Russia, the world's biggest exporter of crude and oil products combined.

Trading activity for Russian crude has slowed as buyers hesitate to make purchases because of sanctions against Russia while US President Joe Biden comes under growing pressure to ban US imports of Russian oil.  

More oil supplies are set to be added from a coordinated release of 60 million barrels of oil reserves by developed nations, agreed this week. Japan said on Friday that it plans to release 7.5 million barrels of oil.