By Barani Krishnan

Investing.com — It took the bears two weeks to force a near 30% selloff in oil — and the bulls just three sessions to recover almost half of that.

Crude futures rose more than 7% in Monday’s London and New York trading as major European nations considered joining the U.S. ban on Russian oil, sending new alarm bells clanging around the energy sector.

Reports over the weekend of Yemen’s Houthi rebels unleashing a barrage of drone and missile attacks on Saudi Arabia, targeting a liquefied plant, water desalination plant, oil facility and power station added to the upward pressure on oil.

Three-day runs-up in Brent and U.S. Crude nearly doubled the drop in crude oil from their March 7 lows above $130/barrel.

In Monday’s trade, London-traded , the global benchmark for oil, settled up $7.69, or 7.1%, at $115.52. Brent was below $97 by Wednesday morning, just before it began its three day rebound. Brent reached $139.13, a record high in 2008 on March 7. 

U.S. crude’s , or WTI, benchmark settled up $7.69, or 7.1%, at $112.12 a barrel. WTI hovered at just above $94 during Wednesday’s lows. The WTI was at $130.50 the previous day.

“Reports of the EU considering an embargo on Russian imports and … Saudi oil facilities (being) targeted” were the main drivers for Monday’s rally, said Craig Erlam, analyst at online trading platform OANDA. 

Erlam said that he was unsure if the EU bloc would follow through on its plans to stop Russian oil imports, as well as those of the United States.

“Given the enormous reliance of certain member states on Russian oil, they may agree on a phased approach that will cut off Russian oil over a period of time,” he said. “The details of that will determine what kind of a reaction we see in the markets” in the coming days.

European Union countries are meeting Monday ahead of U.S. President Joe Biden’s arrival later this week to take part in a series of summits that aim to harden the West’s response to Moscow over its invasion of Ukraine.

Both the U.S.A. and U.K. announced their intention to cut off Russian oil. This is a step that EU governments had so far not taken due to greater dependence on Russian oil.

However, the sanctions currently in place to punish Moscow for Russia’s invasion of Ukraine haven’t had an immediate impact, and with the conflict intensifying the European Union’s top diplomat, Josep Borrell, said that the bloc is ready to discuss including energy in a new round of punishing measures.

In addition to concerns about tightening global markets, the temporary decline in production at A&E was caused by attacks on the Iran-aligned Houthi rebel group from Yemen. Saudi Aramco Refinery at the weekend (SE:

“The product markets are already tight, particularly for middle distillates. Inventories in most regions are at multi-year lows, so the market will be sensitive to any potential supply disruptions on the product side,” said analysts at ING, in a note.

According to the Organization of the Petroleum Exporting Countries, and its allies (OPEC+), the latest report showed that producers have difficulty filling their stipulated supply quotas. In February, the organization was seen exceeding its target of producing more than one million barrels per hour.

Demand-side, China saw its first Covid-19 fatalities in over a decade this weekend. The two fatalities were identical to those reported by the country for 2021.

Near Russia and North Korea, the Jilin region is responsible for over two-thirds domestic infection in this latest wave. While this region isn’t as important strategically than Shenzhen’s south technology hub, Shenzhen, last week was shut down. China continued to employ stringent measures like short, targeted shutdowns in order to stop the virus from spreading, more hits on demand are likely.

Last week, The International Energy Agency (IAEA) provided guidelines for reducing oil use. These included car-pooling, speed limits lowering, and lower costs of public transport.

“The IEA believes that if advanced economies fully implement the measures, oil demand could fall by 2.7MMbbls/d within a four-month period,” ING added.

With additional reporting from Peter Nurse