(Bloomberg). Oil saw its first weekly gain in a row since March, indicating that the market is tightening. The European Union made moves to ban Russian crude oil and the U.S. declared it would replenish its strategic reserves.

West Texas Intermediate moved up to $109/barrel and is now up 4%. Although the EU plans to gradually ban Russian crude oil by year’s end to punish Moscow for invading Ukraine, Hungary has opposed it. All 27 countries must support approval.

The U.S. government said Thursday that it would begin a buyback of crude to replenish the nation’s reserve as early as this fall. To combat rising gasoline prices, President Joe Biden had earlier in the year announced a significant drawdown of its holdings. U.S. retail pump prices remain close to a record.

Since the Ukraine invasion, oil prices have risen by more than 40%. This week’s advance — the third in the past four — has come despite lingering concerns that lockdowns in China to combat Covid-19 outbreaks are hurting consumption. While the Organization of Petroleum Exporting Countries and its allies did announce another modest increase in supply, there’s doubt the alliance will be able to deliver the full volume.

“The prospect of EU sanctions on Russian oil threatens to make an already-tight situation worse,” said Howie Lee, Singapore-based economist at Oversea-Chinese Banking Corp. “With OPEC+ not hitting their monthly quotas as well, the supply shortage issue appears to overshadow the demand loss from China.”

The EU’s member countries are likely to keep discussing the Russian fuel and oil restrictions proposal on Friday. Hungary is dragging its feet. Viktor Orban, the country’s prime minister, has warned that the group risks fracturing its unified front against Moscow if it tries to push the current plan through.  

Oil remains in backwardation, a bullish pattern that’s characterized by near-term prices trading above longer-dated ones. The spread between Brent’s two nearest December contracts, for this year and in 2023, widened to above $13 a barrel this week from about $7.50 a barrel a month ago.

The strength of product markets has also been evident this week. This is especially true in the U.S. as national holdings have declined for gasoline and other distillates. After a more than 5% weekly increase, gasoline futures trade near the record.

The global market’s robust condition was reflected in comments from supermajor Shell (LON:) Plc. After announcing record quarterly earnings, Ben van Beurden, chief executive officer of Shell (LON:) Plc), stated that the company was seeing an increase in demand for oil products.

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