By Nicole Jao

NEW YORK (Reuters) -Oil prices settled down on Friday on prospects for a peace deal between Russia and Ukraine that could ease global supply disruptions by ending sanctions against Moscow, but losses were limited by a delay in U.S. immediate reciprocal tariffs.

Brent futures settled down 28 cents, or 0.37%, at $74.74 a barrel. U.S. West Texas Intermediate (WTI) crude fell 55 cents, or 0.77%, to $70.74.

For the week, Brent gained 0.11% while WTI lost around 0.37%.

President Donald Trump ordered U.S. officials this week to begin talks on ending the war in Ukraine after Russian President Vladimir Putin and Ukrainian President Volodymyr Zelenskiy expressed a desire for peace in separate phone calls with him.

Lifting sanctions on Moscow in the event of a peace deal should boost global energy supplies.

Russian oil exports could be sustained if workarounds to the latest U.S. sanctions package are found, the International Energy Agency (IEA) said in its latest oil market report.

This week, Trump ordered commerce and economic officials to study reciprocal tariffs against countries that place tariffs on U.S. goods and to return their recommendations by April 1.

"Positive development on the trade front in light of U.S. tariff delays paves the way for some recovery in oil prices this morning, as the risk environment warms up to the prospects of further trade consensus being reached," said IG market strategist Yeap Jun Rong.

Also limiting the losses, U.S. Treasury Secretary Scott Bessent said in an interview that the U.S. could apply maximum economic pressure on Iran.

Trump had driven Iran's oil exports to near zero during his first term after reimposing sanctions.

Global oil demand has surged to 103.4 million barrels per day (bpd), up by 1.4 million bpd from the prior year, JPMorgan analysts said on Friday.

"Initially sluggish demand for mobility and heating fuels picked up in the second week of February, suggesting the gap between actual and projected demand will soon narrow," the bank said.

U.S. energy firms this week added oil and natural gas rigs for a third week in a row for the first time since December 2023, energy services firm Baker Hughes said in its closely followed report on Friday.

The oil and gas rig count, an early indicator of future output, rose by two to 588 in the week to February 14.

(Reporting by Nicole Jao, Paul Carsten, Sudarshan Varadhan and Jeslyn LerhEditing by David Goodman, David Evans and David Gregorio)