Brent above $120/b on Saudi Arabia price adjustment

Brent crude surged above $120 a barrel on Monday after Saudi Arabia raised prices on its crude sales in July, signaling tight supply even after OPEC+ agreed to accelerate production increases over the past few months. next two months.

Brent crude rose 91 cents, or 0.8% to $120.63 a barrel after hitting an intraday high of $121.95, extending a 1.8% gain from Friday.

U.S. West Texas Intermediate (WTI) crude futures CLc1 rose 93 cents, or 0.8%, to $119.80 a barrel after hitting a three-month high of $120.99. It gained 1.7% on Friday.

Saudi Arabia has raised the official selling price (OSP) of its flagship Arab light crude to Asia at a premium of $6.50 over the average of Oman and Dubai benchmarks, from a premium of $4.40 in June, state oil producer Aramco 2222.SE said Sunday.

July’s OSP is the highest since May, when prices hit all-time highs amid fears of disrupted supplies from Russia amid sanctions over its invasion of Ukraine.

The price hike came despite a decision last week by the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, to increase production in July and August by 648,000 barrels per day, or 50% of more than planned.

Iraq said on Friday it plans to increase production to 4.58 million bpd in July.

Oil producers are “making hay while the sun is shining,” said Avtar Sandu, head of commodities at Phillip Futures in Singapore, adding that the US summer, which is boosting demand and the easing of COVID-19 lockdowns 19 in China, should keep prices high.

OPEC+’s move to bring forward production hikes is widely seen as unlikely to meet demand as the increased allocation is spread across all members, including sanctioned Russia .

“While this increase is badly needed, it falls short of demand growth expectations, especially with the EU’s partial ban on Russian oil imports also factored in,” said analyst Vivek Dhar. of the Commonwealth Bank, in a note.

Separately, Italy’s Eni and Spain’s Repsol could start shipping Venezuelan oil to Europe as early as next month to offset Russian crude, five people familiar with the matter have told Reuters, resuming stalled oil-for-debt swaps. two years ago when Washington stepped up. sanctions against Venezuela.

However, the volume companies will receive is not expected to be large, the people said.

Eleanor C. William