Peter Nurse   

Investing.com — Monday’s oil prices rose to the highest level in over two months. This was due to signs that China is opening up from COVID lockdowns, and before the European Union meets to ban Russian oil imports.

Futures were trading 0.6% higher at $115.75 per barrel by 5:05 PM ET (905 GMT) while contract prices rose 0.6% to $116.28 per barrel

U.S. gallon prices were at $3.9211/gallon, up 0.2%

Markets have been helped by the news that China’s restrictions on mobility were lifted over the weekend. Beijing has reopened some of its public transport routes on Sunday and Shanghai plans to end a COVID lockdown lasting two months starting June 1.

Strict mobility restrictions have severely hit the nation’s economy, the second largest in the world and the biggest importer of crude in the globe.

The attention of others is on another, which will begin later in the afternoon to discuss a sixth round of sanctions against Moscow to punish it for its invasion Ukraine. It could also include an oil embargo.

While the EU had planned to cease buying Russian crude oil or refined products before the end of 2011, it requires unanimous support and is facing opposition from Hungary as well as Czechia and Slovakia. All three countries are landlocked and have an historical dependency on oil from Soviet-era pipelines.

“Hungary wants EU funding in order to help them increase pipeline capacity from Croatia and also for refiners to be able to switch to alternative crude,” said analysts at ING, in a note. 

“Diplomats are expected to meet ahead of the summit today, however, it’s unlikely that members come to an agreement when they meet, given that talks have not progressed enough.” 

An additional ban on Russian oil could tighten an already tightening crude oil market amid growing demand, as peak summer season in Europe and the United States draws near. 

The tight market is further exacerbated by the Organization of the Petroleum Exporting Countries (OPEC+) which is made up of Russia. It is likely to increase July production targets by a mere 432,000 barrels/day, sticking to the original plan and rebuffing Western requests for a quicker increase in order to curb rising prices.

“However, as we have seen for several months now, it is unlikely that members will produce anywhere near their agreed output levels,” added ING.

France demanded the release of the two Greek flagged oil tankers taken by the Islamic Revolutionary Guard Corps last week in the Persian Gulf. It was widely interpreted as a response to Greek authorities confiscating an American-flagged vessel allegedly carrying Iranian oil.