MELBOURNE (Reuters) – Oil prices rose more than $2 in early trading on Monday after Saudi Arabia raised crude sales prices sharply in July, an indication of how tight supply is even after OPEC+ agreed to speed up production increases over the next two months. .
Brent crude futures rose $1.80, or 1.5 percent, to $121.52 a barrel at 2319 GMT, after touching an intraday high of $121.95, extending its 1.8 percent gain from Friday.
US West Texas Intermediate crude futures rose $1.63, or 1.4 percent, to $120.50 a barrel, after hitting a three-month high of $120.99. The contract increased 1.7% on Friday.
State oil company Aramco said on Sunday that Saudi Arabia raised the official selling price for its flagship Arab Light crude to Asia to a premium of $6.50 against the average of the Oman and Dubai indices, up from a premium of $4.40 in June.
The move comes despite the decision last week by the Organization of the Petroleum Exporting Countries (OPEC) and its allies, called the OPEC+ community, to increase production in July and August by 648,000 barrels per day, or 50% more than previously planned.
“A few days after opening the taps a little wider, Saudi Arabia wasted little time in raising the official selling price for Asia, and its primary market…seeing spillover effects in futures open across the oil market spectrum,” SPI Asset Management said. Partner Stephen Innes on a note.
Saudi Arabia also increased the Arab Light OSP to Northwest Europe to $4.30 above Brent crude in July, from $2.10 in June. However, it maintained a flat premium relative to the US-bound barrel at $5.65 above the Argus Sour Crude Oil Index (ASCI).
The OPEC+ move to introduce production increases is widely seen as unlikely to meet demand as many member states, including Russia, are unable to boost production, while demand is rising in the US amid peak driving season And China is working to ease COVID lockdowns.
“While this increase is badly needed, it falls short of expectations for demand growth, particularly with the partial EU ban on Russian oil imports in mind,” Commonwealth Bank analyst Vivek Dahar said in a note.
(Reporting by Sonali Paul in Melbourne; Editing by Sam Holmes)
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