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 went in and out of positive territory Friday and were headed for their biggest weekly decline since November as traders looked towards ways in which disruptions of Russian oil supply could be remedied in a tight market.

Oil prices soared after Russia invaded Ukraine and hit their highest levels since 2008 but have pulled back a bit this week on hopes that some producing countries may act to increase supply.

Brent crude futures were up 10 cents, or 0.1%, at $109.43 a barrel by 1353 GMT. U.S. West Texas Intermediate (WTI) crude futures rose 23 cents, or 0.2%, to $106.25 a barrel.

Brent, which rose over 20% last week, was on track for a weekly fall of 7.6% after hitting $139.13 on Monday. U.S. crude was headed for a weekly drop of 8.4% 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.

"These include more strategic storage releases, more U.S. shale oil, and more petro-nations' oil including the element of the high diplomatic cost the West is willing to bear by possibly allowing Iran and even Venezuela back to the market, and ultimately the economic costs by high fuel prices curbing demand and temporarily denting growth."

Easing bullish supply concerns, Russian producer Surgutneftegaz has allowed buyers from China, the world's top oil importer, to receive oil without providing letters of credit (LC) in order to bypass Western sanctions, three people with knowledge of the matter said.

Russia rivals Saudi Arabia for the position of the world's top exporter of crude and oil products combined, with exports of around 7 million bpd, or 7% of global supply.

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

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.

OPEC member Iran has yet to seal a nuclear deal with world powers which could release its sanctions barrels to the market, but Europe's top diplomat said talks on an almost completed accord were "paused."

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.