Oil prices rose after a weekly decline, as Saudi Arabia raised the prices of its crude to Asia for the third straight month, indicating confidence in the future price outlook as OPEC+ cuts supplies.
Brent crude rose above $83 a barrel after falling more than 7% last week, its biggest loss since February. West Texas Intermediate was around $78. Saudi Arabia’s state-owned oil giant Aramco raised the June official selling price for its flagship Arab Light crude by 90 cents to $2.90 a barrel above the Oman-Dubai benchmark. That compares with a 60-cent increase expected in a Bloomberg survey.
Geopolitical risks
Oil prices fell last week on easing risks of conflict in the Middle East, paring gains since the start of the year. OPEC and its allies are widely expected to push ahead with supply cuts in the second half of the year when they meet next month. Before then, Iraq and Kazakhstan — the laggards in reducing output — have laid out plans for how to limit flows to bring production in line with already agreed quotas.
“Early morning price action today was supported by higher Saudi OSPs amid tighter physical supply,” said Warren Patterson, head of commodity strategy at ING Group in Singapore. “This comes despite futures coming under pressure as tensions in the Middle East continue to ease.”
Talks over the weekend on a possible truce between Israel and Hamas collapsed inconclusively. Meanwhile, options markets have shed risk premiums as fears of a wider regional war have faded. Brent crude prices are now at their lowest levels in nearly two months.
