Oil surges to 2-month high of $123 after EU agrees to ban most Russian crude imports and China eases COVID rules

• Oil surged to a two-month high over $123 a barrel Tuesday after the EU agreed a ban on most Russian imports.
• Chinese authorities loosened restrictions in Beijing and Shanghai, adding to the upward pressure on prices.

Oil jumped to a two-month high of more than $123 a barrel Tuesday after the European Union agreed to ban most Russian oil imports as part of its sixth round of sanctions.

Meanwhile, authorities in Beijing and Shanghai loosened some of the strict coronavirus restrictions in those Chinese cities, raising the prospect of a pick-up in demand for energy.

Brent crude oil, the global benchmark price, rose 1.88% to $123.55 a barrel as of 4 a.m. ET Tuesday, its highest level since late March.

WTI crude, the US benchmark, was 3.13% higher at $118.64 a barrel, its highest price since early March.

The jump in oil prices came after EU leaders reached a deal to ban the import of Russian oil and petroleum products by sea.

European Council President Charles Michel tweeted that the plan would immediately hit 75% of Russian oil imports, and that it would cover 90% of supply by the end of the year.

The plan includes a temporary carve-out for oil delivered from Russia to Europe by pipeline. The exemption was a concession by other member states to Hungary, Slovakia and the Czech Republic, which are reliant on pipeline deliveries.

Officials from the 27 member states of the EU still have to thrash out the final details, including how long the pipeline exemption will last.

"The announcement that a partial EU ban on Russian oil imports has made it over the finish line sent oil prices higher overnight," Jeffrey Halley, strategist at trading platform Oanda, said in a note.

"Recovering PMI data from China today, and by default recovering energy consumption, has seen the rally continue in Asia," he said. PMIs are surveys that indicate the strength of a country's private sector.

Derek Halpennny, head of research at MUFG, said the jump in oil added to inflationary pressures.

"The price gain has been nearly 9% in the last four trading days," he said. "This will inevitably fuel broader inflation concerns, and could renew fears of central banks still being behind the curve."

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