A worker holds a nozzle to pump petrol into a vehicle at a fuel station in Mumbai, India, May 21, 2018.
A worker holds a nozzle to pump petrol into a vehicle at a fuel station in Mumbai, India, May 21, 2018. Reuters / Francis Mascarenhas

Oil prices rose in volatile trading on Wednesday, supported by disruption to Russian and Kazakh crude exports via the CPC pipeline.

Brent crude futures were up $6.35, or 5.5%, at $121.80 a barrel as of 11:00 a.m. EDT (1400 GMT). U.S. West Texas Intermediate (WTI) crude futures rose $5.72, or 5.2%, to $115 a barrel.

The market remains on edge over the ripple effect of heavy sanctions on Russia, the world's second-largest crude exporter, after its invasion of Ukraine. The oil market has been volatile for weeks, and after a sharp drop last week, crude futures in recent days have been steadily advancing due to uncertainty over current supply.

Russia on Tuesday warned of a drop in oil exports via the Caspian Pipeline Consortium (CPC) of up to 1 million barrels per day (bpd), or 1% of global oil production, because of storm-damaged berths.

CPC exports stopped fully on Wednesday and repairs will take at least one and a half months, according to a port ship agent.

"Prices are primarily rising on the loss of CPC Blend crude exports out of Novorossiisk, which accounts for about 1.3 million barrels per day of exports, adding further bullish fuel to the fire as the drop in Russian crude exports finally appears underway," said Matt Smith, lead oil analyst for the Americas at Kpler.

U.S. President Joe Biden is set to announce more Russian sanctions when he meets with European leaders on Thursday in Brussels, including an emergency meeting of NATO. Russia refers to the invasion, which is now a month old, as a "special operation."

European Union member countries remain split on whether to ban imports of Russian crude and oil products, but this might change once short-term contracts run out.

"You'll know at the end of April what the total loss of Russian oil is," said Trafigura's Ben Luckock, at the FT Commodities Global Summit. He said it was possible that oil could reach $200 a barrel.

Plunging crude stockpiles in the United States, the world's biggest oil consumer, added to the apprehension around supply.

U.S. crude stocks fell by 2.5 million barrels for the week ended March 18, federal data showed, compared with expectations for a modest increase. Production remained flat at 11.6 million barrels per day for the seventh straight week. [EIA/S]

Evidence of concern about supply can be seen in the market structure, where front-month prices are trading at a heavy premium to following months, as buyers scramble to secure supplies.

"I think you will see record backwardation and you will see $150 a barrel this summer," Luckock said.

The one bit of supportive news from the report was the second straight increase in inventories at the Cushing, Oklahoma hub, the delivery point for U.S. crude futures contracts, where stocks rose by 1.2 million barrels.