December 4, 2022

Saudi Arabia has seen a rise in crude oil prices following a rise in crude oil prices

MELBOURNE (Reuters) – Oil prices rose more than $ 2 in early trade on Monday after Saudi Arabia sharply raised its crude sales prices in July, indicating how tight the supply is even after OPEC + agreed to increase its output over the next two months. .

Brent crude futures rose $ 1.80 or 1.5% to 1.8% on Friday, after hitting an intraday high of $ 121.95 at $ 121.52 a barrel at 2319 GMT.

US West Texas Intermediate (WTI) crude futures rose $ 1.63 or 1.4% to $ 120.50 a barrel, a three-month high of $ 120.99. The deal gained 1.7% on Friday.

Saudi Arabia raised its official selling price (OSP) for its premium Arabian light crude oil (OSP) to $ 6.50 in Asia, up from $ 4.40 in June, above the average in Oman and Dubai, the state oil producer Aramco said on Sunday.

Last week, the Organization of the Petroleum Exporting Countries (OPEC +) and its allies decided to increase production by 648,000 barrels a day or 50% more than previously planned in July and August.

“A few days after opening a few spikes, Saudi Arabia wasted some time raising the official selling price for Asia, its primary market … The oil market is looking at the knock-on effects of an open future across the spectrum,” said SBI Asset Management Management Partner Stephen Innes in a note.

Saudi Arabia also raised the Arab Light OSP to northwestern Europe from $ 4.30 over the ICE Brent in July, up from $ 2.10 in June. However, Arcus Sour kept the premium for barrels going to the US at $ 5.65 higher than the crude index (ASCI).

It is widely believed that the OPEC + move to boost production is unlikely to meet demand as many member states, including Russia, are unable to increase production, while the peak flow season in the US and China easing COVID lockdowns.

“While that increase is much needed, it is less than demand growth expectations, especially as the EU is partially blocking Russian oil imports,” Commonwealth Bank analyst Vivek Thar said in a statement.

(Sonali Paul Report in Melbourne; Editing by Sam Holmes)