Brent jumps over $120/bbl after Saudi Arabia raises crude prices

06 Jun Brent jumps over $120/bbl after Saudi Arabia raises crude prices

Oil futures gained on Monday, with Brent rising above $120 a barrel after Saudi Arabia raised prices for its crude sales in July, signalling tight supply even after OPEC+ producers agreed to accelerate output increases over the next two months.

Brent crude climbed 68 cents, or 0.6%, to $120.40 a barrel at 0640 GMT after touching an intraday high of $121.95, extending a 1.8% gain from Friday.

U.S. West Texas Intermediate (WTI) crude futures were up 61 cents, or 0.5%, at $119.48 a barrel after earlier hitting a three-month high of $120.99. It gained 1.7% on Friday.

Saudi Arabia raised the July official selling price (OSP) for its flagship Arab light crude to Asia by $2.10 from June to $6.50 premium versus the average of the Oman and Dubai benchmarks, state oil producer Aramco  said on Sunday.

The July OSP is the highest since May, when prices hit all-time highs due to worries of disruption in supplies from Russia because of sanctions over its invasion of Ukraine.

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

Iraq said on Friday it aimed to raise output to 4.58 million bpd in July.

The OPEC+ decision to bring forward output increases is widely seen as unlikely to meet demand as the increased allocation is spread across all members, including Russia, which is facing sanctions.

Separately, Italy’s Eni and Spain’s Repsol could begin shipping Venezuelan oil to Europe as soon as next month to make up for Russian crude, five people familiar with the matter told Reuters, resuming oil-for-debt swaps halted two years ago when Washington stepped up sanctions on Venezuela.

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