Brent crude fluctuated at the end of a volatile week as Russia’s war in Ukraine kept markets on edge and talks on an Iranian nuclear deal stalled.

Futures in London added 0.7 per cent on Friday, the smallest move in a week that’s seen the biggest swings on record. West Texas Intermediate’s trading range has been the widest since it turned negative in 2020.

Oil headed higher after Iranian nuclear negotiations were halted in Vienna, with no indication of when or whether they will resume. Prices had earlier dipped as President Vladimir Putin noted “positive movement” in talks with Ukraine. The market has been whipsawed this week by news of a US ban on Russian crude imports and what looked to be signs of OPEC+ disunity. There continue to be indications that Russian oil is being shunned more broadly, with no buyers in a recent tender for crude from the country’s Far East.

The fallout from the war has rippled through commodity markets from wheat to key fuels such as gasoline and diesel, increasing inflationary pressure around the world. Rystad Energy AS has predicted Brent could soar to an eye-watering US$240 a barrel this summer if countries continue to sanction Russian oil imports.

“Extreme intraday volatility perhaps says something about several things: degree of uncertainty, the nature of the news flow, the spillover from some chaotic spot markets and the relatively low liquidity levels at some points,” said Paul Horsnell, head of commodities research at Standard Chartered Plc.

Mounting penalties against Russia have prompted fears that an already tight oil market may be stretched further, though OPEC has stressed there’s no shortage of barrels. Banks such as Goldman Sachs Group Inc. have said only demand destruction can halt the price rally.

Open interest in the main oil futures contracts has plunged to a six-year low in recent days as traders retreat from risk. Volatility has rocketed, and exchanges have boosted margins, effectively raising the cost of buying and selling. Brent has been as high as US$139 a barrel and as low as US$105 this week.

The UAE on Wednesday called on OPEC+ to boost output faster, though the nation’s energy minister appeared to later temper that message. The cartel, which counts Russia as a key member, has so far resisted calls from consumers to pump more, arguing that the surge in prices is driven by geopolitical tensions rather than a supply shortage. (Al Jazeera/Bloomberg)