Benchmark Brent crude futures for May climbed $3.56, or 2.9 percent, to $126.77 a barrel at 11:03 GMT.
U.S. West Texas Intermediate (WTI) crude futures for April delivery rose $3.12, or 2.6 percent, to $122.52 a barrel.
British oil major Shell said on Tuesday it plans to withdraw from Russian oil and gas and stop all spot purchases of Russian crude oil as a first immediate step.
Oil prices could climb to over $300 per barrel if the U.S. and European Union ban imports of oil from Russia, Deputy Prime Minister Alexander Novak said on Monday.
Fears that Russia would respond to sanctions already imposed by halting energy exports pushed prices higher.
Goldman Sachs hiked its Brent price forecast for 2022 to $135 per barrel from $98, and its 2023 outlook to $115 a barrel from $105, reasoning that the world economy could face the “largest energy supply shocks ever,” given Russia’s key role.
An apparent slowdown in talks with Iran over its nuclear program, which would end sanctions against its oil sales, added further price support. The European Union envoy in the talks said it was up to Iran and the U.S. to make political decisions to reach a deal.
Furthermore, Iranian oil could take months to flow after a nuclear deal.
Even if Iran alleviates current supply tightness with crude from floating storage, “the drop in free spare capacity and strategic oil reserves would likely keep energy investors uneasy and prices at elevated levels,” Swiss bank UBS said on Tuesday.
Oil supply disruptions come as inventories continue to fall worldwide. Five analysts polled by Reuters estimated on average that U.S. crude stockpiles decreased by about 800,000 barrels in the week to March 4.
The poll was conducted ahead of weekly inventory reports from the American Petroleum Institute, an industry group, on Tuesday and the U.S. Energy Information Administration on Wednesday.
By Rowena Edwards