Oil rises after Shanghai ease Covid restrictions, OPEC warns of supply shortage

Oil prices rose on Tuesday as concerns about demand in China eased after Shanghai eased some restrictions related to the spread of the Covid-19 disease, while OPEC warned that it would be impossible to increase production enough to offset the loss of supplies from Russia.

Brent crude futures rose $2.98, or 3.03 percent, to $101.46 a barrel, and West Texas Intermediate crude rose $3, or 3.18 percent, to $97.29 a barrel.

Both fell 4 percent at the close on Monday.

Shanghai said on Monday that more than 7,000 residential areas were considered low-risk, as no new infections were recorded for 14 days, and neighborhoods decided which of them to lift restrictions.

Researcher Vandana Hari said the partial lifting of restrictions in Shanghai had eased pressures stemming from concerns about oil demand in China.

The European Union is drafting proposals for a European oil embargo on Russia in the wake of its invasion of Ukraine, some foreign ministers said on Monday, but no agreement has yet been reached.

The rise in oil prices on Tuesday also came on the heels of a warning from the Organization of the Petroleum Exporting Countries (OPEC) that about seven million barrels of Russian oil could be lost per day due to sanctions or voluntary measures and that it would be impossible to compensate for these quantities.

The member states of the International Energy Agency plan to withdraw about 240 million barrels over the next six months in an attempt to calm the market, of which 180 million barrels will be withdrawn from US stocks at a rate of one million barrels per day as of May.