(Reuters) – SingaporeOil futures soared on Monday, with Brent jumping above $120 a barrel after Saudi Arabia boosted pricing for its crude sales in July, signifying tight supplies even after OPEC+ agreed to accelerate output increases over the next two months.
Brent crude was up 91 cents, or 0.8 percent, at $120.63 per barrel at 0343 GMT, having hit an intraday high of $121.95, extending a 1.8 percent gain from Friday.
WTI crude futures in the United States were up 93 cents, or 0.8 percent, at $119.80 a barrel after earlier reaching a three-month high of $120.99.On Friday, it increased by 1.7 percent.
Saudi Arabia hiked the official selling price (OSP) for its flagship Arab light crude to Asia to a $6.50 premium versus the average of the Oman and Dubai benchmarks, up from a $4.40 premium in June, state oil company Aramco (2222.SE) said on Sunday.
The July OSP is the highest since May, when prices hit all-time highs due to worries of interruption in supply from Russia amid sanctions over its invasion of Ukraine.
Despite a decision last week by the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, to increase supply by 648,000 barrels per day, or 50% more than previously planned, prices rose.
Iraq announced on Friday it intends to raise output to 4.58 million bpd in July.
Oil producers are “making hay while the sun shines”, Avtar Sandu, manager of commodities at Phillip Futures in Singapore said, adding that U.S. summer driving demand and relaxation of COVID-19 lockdowns in China are expected to keep prices high.
The OPEC+ plan to accelerate output increases is widely regarded as unlikely to meet demand, given that the increased allocation is split among all members, including Russia, which is subject to sanctions.
“While that increase is sorely needed, it falls short of demand growth estimates, especially with the EU’s partial ban on Russian oil imports also factored in,” Commonwealth Bank analyst Vivek Dhar wrote in a note.
Separately, Italy’s Eni and Spain’s Repsol could restart shipping Venezuelan oil to Europe as soon as next month to make up for Russian crude, five people familiar with the situation told Reuters, resuming oil-for-debt swaps halted two years ago when Washington tightened up sanctions on Venezuela.
However, the number that the companies will receive is not likely to be enormous, the people said.
