Oil is subject to a weekly loss with the advent of show treatments

A general view shows a local oil refinery behind apartment buildings in Omsk, Russia on February 10, 2021. REUTERS/Alexey Malgavko

LONDON (Reuters) – Oil prices entered and exited positive territory on Friday and were headed for their biggest weekly drop since November as traders looked for ways in which disruptions to Russian oil supplies could be addressed in a tight market.

Oil prices rose after Russia’s invasion of Ukraine and reached their highest levels since 2008, but fell slightly this week on the hope that some producing countries will increase supply.

Brent crude futures rose 10 cents, or 0.1%, to $109.43 a barrel by 1353 GMT. US West Texas Intermediate crude futures rose 23 cents, or 0.2%, to $106.25 a barrel.

Brent crude, which rose more than 20% last week, was on track for a weekly decline of 7.6% after hitting $139.13 on Monday. US crude is heading for a weekly decline of 8.4% after touching a high of $130.50 on Monday. Both contracts touched these price peaks in 2008.

Volatility inflamed this week as the conflict between Russia and Ukraine prompted the United States and several Western oil companies to stop buying Russian oil amid talk of potential supply additions from Iran, Venezuela and the United Arab Emirates. Read more

“We are closely watching the pressure valves, which will absorb the supply shock,” said Norbert Roecker, head of economics at UPS.

“These include more strategic storage releases, more US shale oil, and more petro-states oil, including an element of the exorbitant diplomatic cost that the West is willing to incur by allowing Iran and even Venezuela to return to the market, and ultimately the economic costs due to Higher fuel prices are curbing demand and temporarily hampering growth.”

Rising supply concerns eased by Russian producer Surgutneftegaz (SNGS.MM) It allowed buyers from China, the world’s largest oil importer, to receive oil without providing letters of credit to bypass Western sanctions, three people familiar with the matter said.

Russia competes with Saudi Arabia for its position as the world’s largest exporter of crude oil and petroleum products combined, with exports of about seven million barrels per day, or 7% of global supplies. Read more

The European Union, which relies heavily on Russian energy, has not joined the United States and Britain in banning Russian oil.

Vivek Dar, an analyst at the Commonwealth Bank, said it was unlikely that supply gaps would be filled in the near term with additional production from members of the Organization of the Petroleum Exporting Countries and allies, called the OPEC+ community, given that Russia was part of the grouping.

Iran, a member of the Organization of the Petroleum Exporting Countries (OPEC), has not concluded a nuclear deal with world powers that could release barrels of sanctions imposed on it into the market, but the top European diplomat said talks on a near-complete agreement were “paused.” Read more

In addition, some OPEC+ producers, including Angola and Nigeria, have struggled to meet production targets, limiting the group’s ability to offset Russian supply losses.

Additional reporting by Sonali Paul and Mohi Narayan; Editing by Susan Fenton and Nick Szyminski

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