Oil rises after Saudi Arabia hiked crude prices

West Texas Intermediate crude was trading at around $120 a barrel after hitting its highest level in almost three months earlier. Saudi Arabia raised its prices for Asian customers in July as China – the world’s biggest importer of crude oil – cautiously emerges from a lockdown that has put pressure on its economy.

Oil is up nearly 60% this year as the recovery in demand from the pandemic coincided with a tightening of the market following Russia’s invasion of Ukraine. The war raised inflation, driving up the cost of everything from food to fuel, and prompted a severe tightening of monetary policy by central banks.

Last week, OPEC+ agreed to speed up output following repeated calls from the US to boost production. The organization will add 648,000 barrels per day in July and August, about 50% more than the increase in recent months. However, in recent times the group has struggled to meet its supply targets, raising doubts as to whether it will be able to achieve this goal.

The fuel market has also shrunk significantly as the peak demand period in the US begins with the summer driving season. Retail gasoline prices surged to record highs and New York futures reached a new high on Monday.

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Saudi Aramco has raised the price of its key Arab Light oil for Asian customers by $2.10 a barrel since June to $6.50 above its benchmark. According to a Bloomberg survey, the market was expecting a $1.50 increase. Aramco also raised prices for the Northwest European and Mediterranean regions.

Brent remains steeply backwardated, a bullish structure where near-dated contracts are more expensive than later-dated ones. The fast time spread for the global benchmark was $2.72 a barrel backwards compared to $2.69 on Friday. For WTI, the spread was about $3.