Models of oil barrels and a pump jack are displayed in front of Ukrainian and Russian flag colors in this illustration taken, February 24, 2022.
Models of oil barrels and a pump jack are displayed in front of Ukrainian and Russian flag colors in this illustration taken, February 24, 2022. Reuters / DADO RUVIC

Oil climbed about 3% on Friday in a volatile session as the disruption of Russian exports from Western sanctions outweighed hopes for more Iranian supply if Washington reaches a nuclear deal with Tehran.

Prices have soared over the past week after the United States and allies sanctioned Russia following its invasion of Ukraine. Russian oil sales have been disrupted, with sellers unable to place orders even as they offer massive discounts to benchmark Brent crude.

Brent was on track for its highest close since June 2014 and WTI for its highest close since May 2011. During the week, Brent rose to its highest intraday since May 2012 and WTI its highest since September 2008.

Prices rallied after Russian troops seized Europe's biggest nuclear power plant. A blaze in a training building was extinguished and officials said the facility was now safe.

Brent futures rose $3.36, or 3.0%, to $113.82 a barrel by 12:04 p.m. EST (1704 GMT), while U.S. West Texas Intermediate (WTI) crude rose $3.43, or 3.2%, to $111.10.

"Iran claims they will be able to ramp up production quickly, but the potential disruptions of Russian supplies is too big of a shock for energy markets," said Edward Moya, senior market analyst at OANDA.

Russia exports roughly 4 million to 5 million barrels of crude every day, more than any nation apart from Saudi Arabia. Buyers have been paying dearly for other grades while shunning Russian barrels. On Friday, Shell bought a shipment of Russian oil at a discount of more than $28 to current physical Brent, a signal of how impaired the Russian market is at the moment.

Crude prices are set to post their strongest weekly gains since the middle of 2020, with the U.S. benchmark up more than 21% and Brent 16%.

Indirect talks between Iran and the United States on reviving the 2015 Iran nuclear deal are close to reaching an agreement, the chief British envoy said on Friday as she and her French and German colleagues flew home to brief ministers.

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 deal, which could boost Iranian oil exports by as much as 1 million barrels per day (bpd) 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.

Also supporting oil prices this week, Libya's National Oil Co (NOC) temporarily halted exports from four ports due to bad weather, it said on Thursday.

Libya, an OPEC member, produced about 1.2 million bpd of crude in 2021, according to U.S. energy data.

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.