Oil prices jumped 4% toward $115 a barrel this afternoon in a volatile session as fears over disruption to Russian exports in the face of Western sanctions outweigh the prospect of more Iranian supply in the event of a nuclear deal with Tehran.
Russian forces in Ukraine seized Europe's biggest nuclear power plant in what Washington called a reckless assault that risked catastrophe.
However a blaze in a training building was extinguished and officials said the site was safe.
Brent crude rose as high as $114.98 a barrel and was up $4.44, or 4%, at $114.90 this afternoon. US West Texas Intermediate (WTI) added $4.06, or 3.8%, to $111.73 after touching a high of $112.84.
"Russia's invasion of Ukraine means that fears over supply will remain front and centre," said Stephen Brennock of oil broker PVM, though he added that there is "a new sense of urgency" to revive the Iranian nuclear deal.
Crude oil hit its highest in a decade this week and prices are set to post their strongest weekly gains since the middle of 2020, with the US benchmark up more than 21% and Brent 17%.
"We could well be heading for recessionary oil prices," said Craig Erlam of brokerage OANDA. "It's hard to imagine that it's peaked."
Prices yesterday swung in a $10 range but settled lower for the first time in four sessions as investors focused on the revival of the Iran nuclear deal, which is expected to boost Iranian oil exports and ease tight supplies.
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But Iran's Foreign Minister Hossein Amirabdollahian said today that the West's "haste" to reach a nuclear agreement "cannot prevent the observance of Iran's red lines", including economic guarantees.
Oil prices are rising on fears that Western sanctions over the Ukraine conflict will disrupt shipments from Russia, the world's biggest exporter of crude and oil products combined.
Trading activity for Russian crude has slowed as buyers hesitate to make purchases because of sanctions against Russia while US President Joe Biden comes under growing pressure to ban US imports of Russian oil.
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.
Gas prices soar to record highs
Europe and UK gas prices hit record highs as the geopolitical situation continued to stoke supply fears.
Europe reference Dutch TTF gas price struck €213.90 per megawatt hour in afternoon deals and UK gas hit 508.80 pence per therm.
"There is apparently fear of disrupted gas flows from Russia, although flows look normal until recently," Commerzbank analyst Carsten Fritsch told AFP.
"There is also speculation that oil and gas flows from Russia could be sanctioned directly, which has been avoided for now.
"The seizure of the large Ukrainian nuclear plant by Russian troops has certainly added to this speculation."