Renewed concerns about global supply shortages are pushing oil prices back up, the latest sharp moves in three weeks of extraordinary market volatility since Vladimir Putin ordered Russian tanks to Ukraine.

The international oil benchmark Brent oil reached $107.93 a barrel on Friday, up more than 9 percent for the previous two sessions. The price was well below the $139 peak reached on March 7, but still about $10 a barrel more than before the Russian invasion.

Calculating the delivery effect of punitive sanctions against Russia, the world’s largest exporter of crude oil and petroleum products, has been complicated by hopes of peace talks between Moscow and Kiev and the possibility of relaxed restrictions on oil exporters Venezuela and Iran. Lockdowns to contain another wave of Covid-19 in China, the world’s largest petroleum importer, will cut some of its consumption.

“Oil price volatility goes hand in hand with wars involving major oil producers,” said Bill Farren-Price, director at Enverus, an energy consultancy.

“Supply risk is one thing, but doubts about demand go the other way. The next big markers will be the European approach to Russia’s energy sanctions and nuclear talks with Iran, which could cause a flood of Iranian oil. It’s a huge oil price rocker.”

Oil prices soared after the International Energy Agency said on Thursday that Russian crude oil production could fall by as much as 3 million barrels per day from April, or 3 percent of the world’s total. The agency, a watchdog for western countries, warned the world could be on the cusp of “the biggest” [oil] supply crisis in decades”.

But price increases will be contained until traders can quantify the magnitude of Russia’s supply losses, other analysts said.

Russian oil production had actually risen so far in March, said Florian Thaler, chief executive of OilX, which tracks global oil flows. Sales of refined products began to decline, but crude oil exports remained robust, he said.

EU countries and others, including China, continue to buy Russian oil despite the US ban. Thaler said India, which normally imports about 150,000 b/d of Russian crude, could increase that to more than 500,000 b/d in April.

Russian crude oil exports were now being sold at prices well below Brent to attract buyers, Morgan Stanley analysts said, “and history suggests that, when discounted enough, crude oil tends to find”.

Any loss of Russian production would put pressure on a fragile market in which global oil supplies have already failed to keep pace with rising demand after the pandemic, analysts say.

On Thursday, Morgan Stanley raised its third-quarter Brent price forecast by $20 a barrel to $120 a barrel. Goldman Sachs has raised its forecast to $135 a barrel for the year, but said Brent could rise to $175.

Commercial oil inventories in rich countries have been declining rapidly as supply lags demand, the IEA said this week. Western countries have also pulled oil from emergency reserves to cool oil prices, which remain more than twice their historical long-term average.

Some analysts have said that a price hike caused by an emerging supply shock could destroy demand for oil and ultimately push prices down.

The crisis in Ukraine alone could “significantly dampen global economic growth,” the IEA said. It lowered its forecast by about a third for how much more crude oil the world would use in 2022.

OilX’s Thaler pointed to China, where he said refinery imports and demand were moving much lower now than they were in 2021.

In contrast, consumption in the US, the world’s largest petroleum market, has remained close to historic highs of more than 20 million b/d in recent weeks, despite record domestic gasoline prices.

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