A general view shows a local oil refinery behind residential buildings in Omsk, Russia February 10, 2021.
A general view shows a local oil refinery behind residential buildings in Omsk, Russia February 10, 2021. Reuters / ALEXEY MALGAVKO

Oil prices rose Friday but were still headed for a weekly decline as traders weighed headlines around Russia and Iran suggesting more possible supply disruptions, versus those promising remedies in a tight market.

Benchmark futures have soared since Russia's invasion of Ukraine and hit their highest levels since 2008 at the start of this week but pulled back sharply over the last two sessions, as some producing countries signalled they may act to increase supply.

Brent crude futures rose $2.46, or 2.3%, to $111.79 a barrel by 11:49 a.m. ET (1649 GMT) after hitting a low of $111.74 earlier. U.S. West Texas Intermediate (WTI) crude futures rose $3.09, or 2.9%, to $109.11 a barrel, rebounding from a session low of $104.48.

U.S. President Joe Biden said the G7 industrialized nations will revoke Russia's "most favored nation" trade status, and announced a U.S. ban on Russian seafood, alcohol and diamonds. The United States had banned Russian oil purchases earlier in the week.

Meanwhile, talks to revive the 2015 Iran nuclear deal on Friday faced the threat of collapse after a last-minute Russian demand forced world powers to pause negotiations for an undetermined time despite having a largely completed text.

Brent, which rose over 20% last week, was on track for a weekly fall of over 5% after hitting $139.13 on Monday. U.S. crude was headed for a weekly drop of near 6% after touching a high of $130.50 on Monday. Both contracts last touched these price peaks in 2008.

Volatility was fuelled this week as the Russia-Ukraine conflict pushed the United States and many Western oil firms to stop buying Russian oil amid talk of potential supply additions from Iran, Venezuela and the United Arab Emirates.

"We have a close eye on the pressure valves that will absorb the supply shock," said UBS head of economics Norbert Ruecker.

In the near term, supply gaps are unlikely to be filled by extra output from members of the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, given Russia is part of the grouping, Commonwealth Bank analyst Vivek Dhar said.

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