Oil prices edged higher on Friday after posting rapid fluctuations in the previous trading session, as the market began to price in supply risks from the Russia-Ukraine war while taking into account alternative supply sources if further sanctions to Russia are applied.
International benchmark Brent crude was trading at $110.92 per barrel at 0701 GMT for a 1.45% gain after closing the previous session at $109.33 a barrel.
American benchmark West Texas Intermediate (WTI) traded at $107.27 per barrel at the same time for a 1.18% increase after the previous session closed at $106.02 a barrel.
A shifting market on Thursday saw Brent crude climb to $118 a barrel before receding to $109 a barrel, as investors weighed the risks of supply gaps after the US banned imports of Russian oil, gas and other energy products.
Supply fears are the main driver of higher prices despite claims of immediate alternative supplies to Russian oil exports in the face of wider sanctions.
Among these are US-sanctioned Iran, and to a lesser extent, Venezuela, although experts say any short-term production from these countries would not be enough to compensate for the loss of Russian oil.
More output from the OPEC+ group could also plug the supply gap, but these producers are reluctant to increase output, saying 'the current oil market fundamentals and the consensus on its outlook pointed to a well-balanced market, and that the current volatility is not caused by changes in market fundamentals but by current geopolitical developments.'
Due to technical issues and capacity constraints, the OPEC+ alliance has only been able to pump 280,000 barrels per day (bpd) of oil, relative to the planned increase of 400,000 bpd in January, according to the International Energy Agency.
Some market relief was evident when concerns waned that EU countries would not follow the US in banning Russian oil.
By Sibel Morrow