By Ahmad Ghaddar
LONDON (Reuters) -Oil prices jumped by 3% on Tuesday on hopes for a relaxation of China’s strict COVID-19 controls after rare protests in Chinese cities over the weekend.
Brent crude futures gained $2.50, or 3%, to $85.69 a barrel at 1119 GMT. U.S. West Texas Intermediate (WTI) crude futures rose $1.98, or 2.6%, to $79.22.
Chinese health officials on Tuesday said the country plans to speed up COVID-19 vaccinations for elderly people, aiming to overcome a key stumbling block in efforts to ease unpopular “zero-COVID” curbs
“The prospect of a return to normality, in an economy that is the world’s largest oil importer, was enough to make oil prices jump in the first significant price rebound of the last two weeks,” said ActivTrades analyst Ricardo Evangelista.
Rare street protests in cities across China over the weekend were a vote against President Xi Jinping’s zero-COVID policy and the strongest public defiance of his political career, China analysts said.
Oil prices were also supported by the possibility that major producers could adjust their output plans, with analysts at Eurasia Group suggesting on Monday that weakened demand out of China could prompt a production cut.
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, a group known as OPEC+, hold their next meeting on Dec. 4.
OPEC+ started to lower its output target by 2 million barrels per day (bpd) in November, aiming to shore up oil prices.
Markets are also assessing the impact of a looming Western price cap on Russian oil.
Diplomats from the Group of Seven (G7) nations and the European Union have been discussing a cap between $65 and $70 a barrel, aiming to limit revenue to fund Moscow’s military offensive in Ukraine without disrupting global oil markets.
However, EU governments on Monday failed to agree on the cap, with Poland insisting it should be set lower than the level proposed by the G7, diplomats said.
The price cap is due to come into effect on Dec. 5, when an EU ban on Russian crude also takes effect.
(Reporting by Ahmad GhaddarAdditional reporting by Yuka Obayashi in Tokyo and Muyu Xu in SingaporeEditing by David Goodman)