Oil rose above $100 a barrel in a volatile session on Wednesday, finding support from supply concerns and easing worries about slowing Chinese demand, while signs of progress in Russia-Ukraine peace talks limited gains.
Three million barrels per day of Russian oil and products may not find their way to market beginning in April in the wake of its invasion of Ukraine, the International Energy Agency (IEA) said on Wednesday, as sanctions bite and buyers hold off.
"These losses could deepen should bans or public censure accelerate," the Paris-based IEA said in its report, which also cut its oil demand forecast for 2022.
Brent crude rose $1.47 or 1.5% to $101.38 a barrel by 1321 GMT, having traded as high as $103.70 earlier. U.S. West Texas Intermediate (WTI) crude added $2.50 or 2.6% to $98.94.
Crude settled below $100 on Tuesday, the first time since late February. Trading has been volatile since Russia's invasion of Ukraine on Feb. 24, with prices hitting a 14-year high on March 7 on supply fears.
Oil had come under pressure this week from concerns of slowing demand in China as it takes measures against the Omicron coronavirus variant. Those fears eased on Wednesday, as figures showed fewer new cases and Chinese stimulus hopes boosted equities.
The U.S. Federal Reserve is expected to raise rates for the first time in three years later on Wednesday and give guidance on future tightening. Investors are expecting the central bank to raise rates by at least 25 basis points.
Signs of progress in Russia-Ukraine peace talks weighed.
Ukraine's president said the positions of Ukraine and Russia were sounding more realistic, but time was needed. Russia's foreign minister said some deals with Ukraine were close to being agreed.
"Fears of a supply disruption have been tempered by tentative signs of progress in ceasefire talks between Russia and Ukraine," said Stephen Brennock of oil broker PVM.
"That said, an end to hostilities still seems like a long way off."
Besides the Fed decision, in focus on Wednesday will be the latest round of U.S. inventory data due at 1530 GMT from the Energy Information Administration. Analysts expect a 1.4 million barrel drop in crude stocks.
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