By Scott DiSavino

NEW YORK (Reuters) -Oil prices rose about 3% to a two-month high on Thursday on signs of tight supply ahead of U.S. summer driving season, as the European Union (EU) wrangled with Hungary over plans to ban crude imports from Russia over its invasion of Ukraine.

Brent futures for July delivery rose $3.21, or 2.8%, to $117.24 a barrel by 11:15 a.m. EDT (1515 GMT). U.S. West Texas Intermediate (WTI) crude rose $3.98, or 3.6%, to $114.31.

Brent was up for the sixth straight day in a row and on track for its highest close since March 25. WTI was headed for its highest close since March 23.

“The fundamental backdrop … is getting price supportive as the driving season is approaching and will turn even more bullish once the EU sanctions on Russian oil sales are endorsed by all parties involved,” PVM Oil’s Tamas Varga said.

European Council President Charles Michel said he was confident an agreement can be reached before the council’s next meeting on May 30.

Germany’s economy minister Robert Habeck said the EU can strike a deal on an oil embargo within days or look to “other instruments.”

Hungary remains a stumbling block, as EU sanctions require unanimous support. Hungary is pressing for about 750 million euros ($800 million) to upgrade its refineries and expand a pipeline from Croatia.

Even without a formal ban, much less Russian oil is available as buyers and trading houses have avoided suppliers from the country.

Russia’s oil production should decline to 480-500 million tonnes this year from 524 million tonnes in 2021, state-run news agency RIA reported, citing Deputy Prime Minister Alexander Novak.

OPEC+ meets on June 2 and is expected to stick to an oil production deal agreed last year and raise July output targets by 432,000 barrels per day, six OPEC+ sources told Reuters, rebuffing Western calls for a faster increase to control prices.

Other factors also are supporting oil prices.

“Shanghai is preparing to reopen after a two-month lockdown, while the U.S. peak driving season begins with the Memorial Day weekend,” said Sugandha Sachdeva, vice president of commodities research at Religare Broking. The United States celebrates Memorial Day on Monday.

“All of the variables are pointing to further gains in oil prices going ahead.”

The U.S. government confiscated an Iranian oil cargo held on a Russian-operated ship near Greece and will send the cargo to the United States aboard another vessel.

Britain announced a 25% windfall tax on oil and gas producers’ profits, alongside a 15 billion pound ($18.9 billion) package of support for households struggling to pay energy bills.

Hungary also announced new windfall taxes worth 800 billion forints ($2.19 billion) on “extra profits” earned by banks, energy companies and other firms.

($1 = 0.9348 euros)

($1 = 0.7942 pounds)

($1 = 365.7200 forints)

(Additional reporting by Ahmad Ghaddar in London, Sonali Paul in Melbourne and Mohi Narayan in New Delhi; Editing by Elaine Hardcastle, Mark Potter and David Gregorio)