LONDON (Reuters) - Oil prices edged up on Monday, with traders still on edge despite the U.S. pulling back from initial sanctions threats against Colombia, reducing immediate concern over oil supply disruptions.

Brent crude futures added 38 cents, or 0.5%, to $78.88 a barrel by 1034 GMT. U.S. West Texas Intermediate crude was at $75.01, up 35 cents, or 0.5%.

Both benchmarks had registered moderate declines in early trading.

The U.S. swiftly reversed plans to impose sanctions and tariffs on Colombia after the South American nation agreed to accept deported migrants from the United States, the White House said late on Sunday.

Colombia last year sent about 41% of its seaborne crude exports to the U.S., data from analytics firm Kpler shows.

"Even if the sanctions didn't take place, this still creates nervousness that Trump will bully whoever needs to be bullied to get his way," said Bjarne Schieldrop, chief commodities analyst at SEB.

"Fundamentally, the market is surprisingly tight," said Schieldrop, referring to time spreads showing that the price of crude oil for quicker delivery is rising.

Gains were limited by Trump's repeated call on Friday for the Organization of the Petroleum Exporting Countries (OPEC) to cut oil prices to hurt oil-rich Russia's finances and help to end to the war in Ukraine.

"One way to stop it quickly is for OPEC to stop making so much money and drop the price of oil ... That war will stop right away," Trump said.

Trump has also threatened to hit Russia "and other participating countries" with taxes, tariffs and sanctions if a deal to end the war in Ukraine is not struck soon.

Russian President Vladimir Putin said on Friday that he and Trump should meet to talk about the Ukraine war and energy prices.

"They are positioning for negotiations," said John Driscoll at Singapore-based consultancy JTD Energy, adding that this creates volatility in oil markets.

He added that oil markets are probably skewed a little bit to the downside, with Trump looking to boost U.S. output and try to secure overseas markets for U.S. crude.

"He's going to want to muscle into some of the OPEC market share; so in that sense he's kind of a competitor," Driscoll said.

However, OPEC and its allies including Russia have yet to react to Trump's call, with OPEC+ delegates pointing to a plan already in place to start raising oil output from April.

Both oil benchmarks registered their first weekly decline in five weeks on easing concern last week over potential supply disruptions resulting from the latest sanctions on Russia.

Goldman Sachs analysts said they do not expect a big hit to Russian production because higher freight rates have encouraged non-sanctioned ships to move Russian oil while the deepening discount on the affected Russian ESPO grade attracts price-sensitive buyers.

Still, JP Morgan analysts said some risk premium is justified given that nearly 20% of the global Aframax fleet currently faces sanctions.

"The application of sanctions on the Russian energy sector as leverage in future negotiations could go either way, indicating that a zero risk premium is not appropriate," they added in a note.

Elsewhere, Chinese manufacturing data on Monday was weaker than expected, adding fresh concerns over energy demand.