Oil Jumps on Hopes for Easing of China’s COVID-19 Controls

LONDON—Oil prices jumped by 3 percent 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 percent, to $85.69 a barrel at 1119 GMT. U.S. West Texas Intermediate (WTI) crude futures rose $1.98, or 2.6 percent, to $79.22.

Hopes of faster easing of China’s strict restrictions rose after an official said they will continue to fine-tune policy to reduce the impact of its “Zero COVID” on society.

“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 leader Xi Jinping’s zero-COVID-19 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.

The price cap is due to come into effect on Dec. 5, when an EU ban on Russian crude also takes effect.