Oil price surges as tight market looks to Russian-Western diplomacy

Oil prices rose slightly on Monday as fresh diplomatic efforts to resolve the Ukraine crisis provided some relief from supply concerns that have kept oil prices near $100 a barrel.

Brent crude futures rose 25 cents, or 0.3%, to $93.79 a barrel at 1000 GMT. U.S. West Texas Intermediate (WTI) crude futures rose 35 cents, or 0.4%, to $91.42 a barrel.

French President Emmanuel Macron said on Monday that U.S. President Joe Biden and Russian President Vladimir Putin have agreed in principle to a summit over Ukraine but the Kremlin said there were no immediate plans for a meeting.

U.S. markets will be closed on Monday for the Presidents Day holiday.

“A potential reduction of Ukraine tensions … has seen some sellers emerge in oil in Asia,” OANDA analyst Jeffrey Halley said.

European Commission President Ursula von der Leyen said Russia would be cut off from international financial markets and denied access to major exports needed to modernise its economy if it invaded Ukraine.

“If a Russian invasion takes place, as the U.S. and U.K. have warned in recent days, Brent futures could spike above $100/bbl, even if an Iranian deal is reached,” Commonwealth Bank analyst Vivek Dhar said in a note.

Meanwhile, ministers of Arab oil-producing countries said on Sunday that OPEC+ should stick to its current agreement to add 400,000 barrels per day (bpd) of oil output each month, rejecting calls to pump more to ease pressure on prices.

Price gains have also been limited by the possibility of more than 1 million bpd of Iranian crude returning to the market.

Iranian foreign ministry spokesman Saeed Khatibzadeh said “significant progress” had been made in talks to revive Iran’s 2015 nuclear agreement on Monday after a senior European Union official said on Friday that a deal was “very, very close”.

Analysts said the market remained tight and any addition of oil would help, but prices would remain volatile in the near term because Iranian crude is unlikely to return until later this year.

(Additional reporting by Sonali Paul and Florence Tan; Editing by David Goodman)