Benchmark Brent rose to $119.84 a barrel, the highest since 2012, with additional support coming from data showing U.S. crude stockpiles had hit multi-year lows. By 1416 GMT, it had slipped back to $112.75 a barrel.
Brent has jumped by more than a third in the past month. The contract’s six-month spread hit a record high of more than $21 a barrel, indicating very tight supplies.
U.S. crude hit $116.57, its peak since 2008, before retreating to $109.66.
Prices slid in early U.S. trading, after an Iranian reporter tweeted of a breakthrough in talks to revive an Iran nuclear deal that could see Iranian barrels come back into the market.
The head of the International Atomic Energy Agency, which monitors Iranian nuclear activity, visits Iran on Saturday – another move seen as raising prospects for a deal.
“We again caution that the deal is still not done and the sums entailed would simply be too small to backfill a major Russian disruption,” RBC Capital analyst Helima Croft said.
Oil prices spiked earlier on Thursday after a fresh round of U.S. sanctions on the Russian oil refining sector, raising concerns that oil and gas exports might be next.
Russia, which competes with Saudi Arabia for the title of biggest crude and refined oil products exporter, ships more than 7 million barrels per day (bpd), with about half going to Europe.
Washington and its Western allies have imposed sanctions on Russia over its invasion of Ukraine, but the measures have so far stopped short of targeting Russian oil and gas exports.
But international traders are still wary of becoming entangled in sanctions. At least 10 tankers failed to find buyers on Wednesday, market sources said.
“We expect that Russian oil exports will plunge by 1 million bpd from the indirect impact of sanctions and voluntary actions by companies,” said Rystad Energy Chief Executive Jarand Rystad. “Oil prices are likely to continue to climb – potentially beyond $130 per barrel.”
Australia’s ANZ raised its short-term price target to $125.
The Organization of the Petroleum Exporting Countries, Russia and their allies, a group known as OPEC+, stuck to an existing plan for a gradual output rise of 400,000 bpd a month when they met on Wednesday, snubbing consumer calls for more.
U.S. oil inventories continued to fall. Tanks at the key Cushing crude hub in Oklahoma were at their lowest since 2018, while U.S. strategic reserves dropped to their lowest in nearly 20 years.
