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Oil prices hit $120 as Saudi July price rise eclipses OPEC+ deal
Global Banking & Finance Review®
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By Shadia Nasralla
LONDON (Reuters) – Oil prices hit $120 a barrel on Monday after Saudi Arabia raised crude prices for July and amid doubts that an increased OPEC+ monthly output target will help ease tight supply.
Brent crude firmed 32 cents, or 0.3%, to $120.04 a barrel at 0858 GMT after touching an intraday high of $121.95.
U.S. West Texas Intermediate (WTI) crude futures were up 40 cents, or 0.3%, at $119.27 a barrel after hitting a three-month high of $120.99.
Saudi Arabia raised the July official selling price (OSP) for its flagship Arab light crude to Asia by $2.10 from June to a $6.50 premium, the highest since May, when prices hit all-time highs due to worries of disruption in supplies from Russia.
The price increase followed a decision last week by the Organization of the Petroleum Exporting Countries and allies, together called OPEC+, to boost output for July and August by 648,000 barrels per day, or 50% more than previously planned.
The increased target was spread across all OPEC+ members, however, many of which have little room to increase output and which include Russia, which faces Western sanctions.
“With only a handful of… OPEC+ participants with spare capacity, we expect the increase in OPEC+ output to be about 160,000 barrels per day in July and 170,000 bpd in August,” JP Morgan analysts said in a note.
On Monday, Citibank and Barclays raised their price forecasts for 2022 and 2023, saying they expected Russian output and exports to fall by around 1-1.5 million bpd by end-2022.
Separately, Italy’s Eni and Spain’s Repsol could begin shipping small volumes of Venezuelan oil to Europe as soon as next month, five people familiar with the matter told Reuters.
(Additional reporting by Florence Tan in Singapore and Sonali Paul in Melbourne; editing by Jason Neely)
Brent crude is a major trading classification of crude oil originating from the North Sea. It serves as a benchmark for oil prices globally.
OPEC+ is a coalition of oil-producing countries that includes the members of the Organization of the Petroleum Exporting Countries (OPEC) and other oil-producing nations, aimed at regulating oil production.
The official selling price (OSP) is the price at which a producer sells its crude oil to buyers. It is often adjusted based on market conditions.
West Texas Intermediate (WTI) is a grade of crude oil used as a benchmark in oil pricing. It is sourced from North America and is known for its high quality.
Sanctions are restrictions imposed by countries or international bodies to limit trade and economic activity with specific nations, often affecting oil exports and imports.
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