Oil prices rose more than $ 2 in early trade on Monday after Saudi Arabia raised prices sharply for its crude oil sales in July, an indicator of how tight supply is, even after OPEC + agreed to accelerate production increases over the next two months.
Futures on Brent oil rose $ 1.80 or 1.5% to $ 121.52 per share.
US West Texas Intermediate (WTI) crude oil futures rose $ 1.63, or 1.4%, to $ 120.50 per barrel after reaching a three-month high of $ 120.99. The contract rose 1.7% on Friday.
Saudi Arabia raised the official selling price (OSP) of its flagship, Arabian light oil to Asia, to a premium of $ 6.50 from the Oman and Dubai benchmarks, up from a premium of $ 4.40 in June. said state oil producer Aramco on Sunday.
The move came despite a decision last week by the Organization of the Petroleum Exporting Countries and Allies, collectively known as OPEC +, to increase production in July and August by 648,000 barrels a day, or 50% more than previously planned.
“Just days after opening the taps a bit wider, Saudi Arabia wasted some time raising its official selling price for Asia, its primary market … by seeing contagious effects on futures that open across the oil market spectrum,” managing SPI Asset Management partner Stephen Innes said in a note.
Saudi Arabia also increased Arab Light OSP to Northwestern Europe to $ 4.30 over ICE Brent for July, up from a $ 2.10 premium in June. However, it kept the premium stable for barrels going to the US at $ 5.65 above the Argus Sour Crude Index (ASCI).
OPEC + measures to accelerate production increases are generally considered unlikely to meet demand, as several member states, including Russia, are unable to increase production, while demand is rising sharply in the US in the middle of the high season, and China is easing COVID lockdowns.
“While this increase is badly needed, it does not live up to expectations of demand growth, especially with the EU’s partial ban on Russian oil imports also taken into account,” Commonwealth Bank analyst Vivek Dhar said in a note.