Oil prices rose on Monday as China eased pandemic measures after nearly three months of lockdowns and traders anticipate a deal to limit Russian oil imports into the European Union.
Over the weekend, Shanghai authorities said businesses in the financial hub could start to reopen without having to apply for approval from Wednesday.
In the capital Beijing, major shopping centers, libraries, museums, theatres and gyms were allowed to reopen on Sunday. Limits on the number of people will remain in place across districts that have seen no community COVID cases for seven consecutive days.
Traders are also anticipating an EU deal to limit Russian oil imports ahead of meetings on Monday and Tuesday. Members will discuss a sixth package of sanctions against the Kremlin for its invasion of Ukraine.
EU nations failed to reach a deal over banning Russian crude on Sunday but will continue discussions on an agreement to ban seaborne deliveries of Kremlin oil while allowing deliveries by pipeline.
Chinese crude demand has weakened in recent months after the country imposed a number of stringent coronavirus lockdowns in an effort to stem the spread of COVID-19.
The latest price surge follows stark warnings from International Energy Agency (IEA) head Fatih Birol over further oil price rises if demand in China picks up.
"I very much hope that the increase coming from [the] US, Brazil and Canada this year, [will] be accompanied by the increase coming from the key producers in Middle East and elsewhere," Birol said.
"Otherwise, we have only one hope that we don’t have big trouble in the oil markets in summer, which is hoping..that the Chinese demand remains very weak."
Birol discussing the current challenges facing global oil markets at Davos last week, described oil prices as being "very high".
He said despite working on a Russia crude embargo, Europe still buys substantial amounts of oil from Moscow.
"We may see prices even going higher, being much more volatile and becoming a major risk for recession for the global economy."
"The oil price has resumed its strong rally and now stands up by 54% in the year to date," said Richard Hunter, head of markets at Interactive Investor.
"The possibility of a ban on Russian oil and the beginning of the US driving season has had a dual impact on potential supply and demand, with a potentially improving situation in China also sitting in the background."