By Barani Krishnan

Investing.com – Crude prices were up more than 3% on Wednesday, their most in three weeks, as the European Union said it will completely stop purchasing oil from Russia by the end of the year — renewing the focus on supply in a market where there just does not seem enough barrels to make up for projected demand.

Oil markets started the week on a fragile foot, almost breaking the key $100 per barrel support, on worries about China’s latest Covid situation and how its economic fallout from there could impact demand for crude from the world’s largest importer of the commodity.

The Federal Reserve’s impending rate hike decision for May, due later Wednesday, had also spooked investors across markets, with the central bank looking almost certain to impose a 50-basis, or quarter-percentage, point hike that would be the highest in more than 20 years in an effort to beat inflation growing at its fastest pace since the 1980s.

But European Commission President Ursula von der Leyen’s proposal for a phased oil embargo on Russia over its war in Ukraine, and sanctioning of Moscow’s top bank, put the market back in positive territory by Wednesday.

The gains are likely to continue after the Fed rate decision and into Thursday as oil traders turn their full attention to the monthly meeting of global oil alliance OPEC+, which is determined to keep a barrel at or above $100.

OPEC+ has managed to push crude prices up at each of its meetings over the past year by offering a meager hike of 400,000 barrels per day in monthly production to a market where demand is well above, after the disruptions caused by Covid 2020. On top of that, the alliance, made up of 23 oil-exporting nations that include Saudi Arabia and Russia, has fallen short on its production pledges over the past year, adding to the rally in crude.

In Wednesday’s session, crude, the London-traded global benchmark for oil, was up $3.39, or 3.2%, to $108.36 a barrel by 11:40 A.M. ET (15:40 GMT).

New York-traded , or WTI, the benchmark for U.S. crude, was up $3.48, or 3.4%, to $105.89.

Weekly inventory data from the Energy Information Administration showing a surprise crude build for last week hit WTI briefly, though the bearish impact soon evaporated on numbers showing the U.S. emergency crude reserve having fallen to 21 years low as the Biden administration continued to release oil from there to a supply-starved market.

Notwithstanding crude’s renewed fervor to the upside, analysts said prices had to break beyond the $120 resistance for Brent and $115 for WTI to enter new bullish territory.

“In the bigger picture Brent crude is still in a broader $100 to $120 range and WTI in a $95 to $115,” said Jeffrey Halley, head of Asia Pacific research at online trading platform OANDA. “Only a weekly close above or below those levels signals a new directional move.”