A worker walks past a pump jack on an oil field owned by Bashneft company near the village of Nikolo-Berezovka, northwest from Ufa, Bashkortostan, Russia, January 28, 2015.
A worker walks past a pump jack on an oil field owned by Bashneft company near the village of Nikolo-Berezovka, northwest from Ufa, Bashkortostan, Russia, January 28, 2015. Reuters / Sergei Karpukhin

Oil slid over 7% on Wednesday after reports that the United Arab Emirates will call on fellow OPEC members to boost production, potentially easing some of the supply concerns caused by sanctions on Russia after its invasion of Ukraine.

Oil was already pulling back earlier in the session from a rally to peaks not seen in more than a decade, as some investors' fears over a disruption in Russian supplies eased and the International Energy Agency said oil reserves could be tapped further.

Prices hit session lows after the Financial Times reported Yousef al-Otaiba, the UAE's ambassador to Washington, said the country favours increasing production.

"That's not nothing. They can probably bring about 800,000 barrels to the market very quickly, even immediately, bringing us one-seventh of the way there in replacing Russian supply," said Bob Yawger, director of energy futures at Mizuho.

Brent crude was down $8.91, or 7%, to $119.07 a barrel by 12:16 p.m. EST (1716 GMT). U.S. West Texas Intermediate (WTI) fell $7.66, or 6.2%, to $116.04 a barrel.

The market had rallied over 30%, with global benchmark Brent hitting a 2008 high at $139 a barrel, since Russia, the world's second-largest crude exporter, invaded Ukraine on Feb, 24, and the world retaliated with financial sanctions, and this week, bans on oil imports.

Brent had gained 28% in the previous six days of trading, and the Relative Strength Index, a momentum indicator, suggested the market was due for a selloff.

"There was definitely room for a little bit of a cooldown here," Yawger said. "At these levels, you were going to run out of buyers."

U.S. President Joe Biden on Tuesday imposed an immediate ban on Russian oil, but major European nations did not join in, largely because those nations are more dependent on Russian oil.

Britain said on Tuesday it would phase Russian imports out, however, and numerous buyers have stopped buying Russian crude. JP Morgan estimated around 70% of Russian seaborne oil was struggling to find buyers.

The United States imported more than 20.4 million barrels of crude and refined products a month on average from Russia in 2021, about 8% of U.S. liquid fuel imports, according to the Energy Information Administration.

"Theoretically, the U.S. could even offset the outages from Russia with its own production," Carsten Fritsch of Commerzbank wrote in a report.

The head of the International Energy Agency said its decision last week to release 60 million barrels of oil from strategic reserves as "an initial response."

"If there's a need, if our governments decide so, we can bring more oil to the markets, as one part of the response," said Fatih Birol, head of the IEA.

His remarks echo words from U.S. State Department Senior Advisor Amos Hochstein, who said at an industry conference Tuesday, who also suggested more releases could be coming.

U.S. crude and fuel inventories fell last week, while stocks in the Strategic Petroleum Reserve fell further to their lowest since July 2002. [EIA/S]

One potential source of extra oil supply is Iran, which has been in talks with Western powers for months on resuming its 2015 nuclear deal, abandoned by then-U.S. President Donald Trump in 2018. Iran's chief negotiator in the Vienna talks returned to the Austrian capital on Wednesday.

(Additonal reporting by Yuka Obayashi and Mohi Narayan; Editing by Marguerita Choy and Nick Macfie)