Oil prices climbed above $121 a barrel on Monday, hitting a two-month high as China eased COVID-19 restrictions and traders priced in expectations that the European Union will eventually reach an agreement to ban Russian oil imports.
Trading activity was muted due to a public holiday in the United States.
The Brent crude futures contract for July, which will expire on Tuesday, settled up $2.24, or 1.9%, at $121.67 a barrel. U.S. West Texas Intermediate (WTI) crude futures were up $1.99, or 1.7%, to $117.06 a barrel at 18.03 GMT, extending solid gains made last week.
“One reason being cited for this is the imminent lifting of coronavirus restrictions in Shanghai, which is sparking hopes that oil demand will pick up again in China,” analysts at Commerzbank said in a note to clients.
Shanghai announced an end to its two-month-long COVID-19 lockdown, and will allow the vast majority of people in China’s largest city to leave their homes and drive their cars from Wednesday.
Meanwhile, the EU is meeting on Monday and Tuesday to discuss a sixth package of sanctions against Russia for its invasion of Ukraine, which Moscow calls a “special military operation.”