Oil rebounds as escalating Ukraine conflict raises supply concerns

Brent crude futures for May rose to as much as $114.23 a barrel and were at $113.72, up $3.26, or 3% by 0121 GMT. The contract fell 2.2% on Thursday.

U.S. West Texas Intermediate for April rose $4.15, or 3.9%, to $111.82 a barrel after touching a high of $112.84 earlier in the session. The contract fell 2.6% in the previous session.

Global markets sank while oil prices rose on signs of an escalation in the Russia-Ukraine conflict after reports that a Ukrainian nuclear power plant, Europe’s largest, was on fire after an attack by Russian troops.

Oil is rising on fears that Western sanctions on Russia over the Ukraine conflict will disrupt shipments from Russia, which is the world’s biggest exporter of crude and oil products combined. Trading activity for Russian crude oil already appears frozen as buyers are hesitant in making purchases because of the sanctions.

“Price gains linked to actual and perceived disruptions to Russian oil exports should more than offset any fall in prices from potentially more Iranian crude oil supply,” Commonwealth Bank of Australia analyst Vivek Dhar said.

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

Oil prices are set to post their strongest weekly gains since the middle of 2020, with WTI up more than 22% and Brent at 16% after hitting their highest in a decade this week.

Commonwealth Bank’s Dhar expects Brent to average $110 a barrel in the second and third quarters of this year. But, “the risk is that prices rise above our forecast in the short term. It’s even plausible that Brent futures trade as high as” $150, he said.

Talks on reviving the 2015 Iran nuclear deal appeared to near a climax with talk of an imminent ministerial meeting as a U.N. report on Thursday showed Iran is most of the way to amassing enough enriched uranium for one bomb if purified further.