MELBOURNE (Reuters) – Oil prices rose more than $ 2 in early trading on Monday after Saudi Arabia sharply raised crude oil prices in July, an indicator of how tight supply is even after OPEC + agreed to accelerate production increases over the next two months.
Brent oil futures rose $ 1.80, or 1.5%, to $ 121.52 a barrel at 2319 GMT after reaching an intraday high of $ 121.95, extending a gain of 1.8% from Friday.
US West Texas Intermediate (WTI) crude oil futures rose $ 1.63, or 1.4 percent, to $ 120.50 a barrel after reaching a three-month high of $ 120.99. The contract rose 1.7 percent on Friday.
Saudi Arabia raised the official selling price (OSP) for the flagship Arab light oil to Asia to a premium of $ 6.50 compared to the average of the Oman and Dubai references, up from a premium of $ 4.40 in June, said state oil producer Aramco 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 per day, or 50% more than previously planned.
“Just days after opening the taps a little wider, Saudi Arabia wasted little time increasing its official selling price for Asia, its primary market … by seeing contagious effects on futures open across the oil market spectrum,”[ads1]; SPI Asset Management said. partner Stephen Innes said in a note.
Saudi Arabia also increased Arab Light OSP to Northwest Europe to $ 4.30 over ICE Brent for July, up from a premium of $ 2.10 in June. However, it kept the premium stable for barrels going to the US at $ 5.65 above the Argus Sour Crude Index (ASCI).
The OPEC + measure to accelerate production increases is considered unlikely to meet demand as more member states, including Russia, are unable to increase production, while demand increases in the US in the middle of the high season and China eases covid shutdowns.
“Although this increase is urgently needed, it falls short of expectations of growth in demand, especially with the EU’s partial ban on Russian oil imports also taken into account,” Commonwealth Bank analyst Vivek Dhar said in a note.
(Reporting by Sonali Paul in Melbourne; Editing by Sam Holmes)