Oil exceeds $120 after Saudi Arabia raises crude prices

Oil futures rose above $120 on Monday after Saudi Arabia raised crude selling prices in July, indicating a tight supply even as the OPEC+ producers agreed to accelerate production increases over the next two months.

Brent crude rose 68 cents, or 0.6 percent, to $ 120.40 a barrel by 0640 GMT, after touching a high on Monday of $ 121.95 a barrel, consolidating a gain of 1.8 percent made on Friday.

US West Texas Intermediate crude futures rose 61 cents, or 0.5%, to $119.48 a barrel, after earlier hitting a three-month high of $120.99 a barrel. Crude rose 1.7 percent on Friday.

Saudi Arabia raised the official selling price of Arab Light crude to Asia by $2.1 a barrel in July from June to $6.50 above the Oman/Dubai average, oil giant Aramco said on Sunday.

The official selling price for crude in July was the highest since May, when prices reached their highest level ever due to fears of disruption to supplies from Russia as a result of sanctions imposed on it after its invasion of Ukraine.

The increase came despite the OPEC + countries’ agreement last week to increase production by 648,000 barrels per day in July and August, which is a 50 percent increase from what was previously planned.

On Friday, Iraq said it aimed to raise production to 4.58 million barrels per day in July.

It is widely believed that the decision of OPEC + to bring forward the date of the increase in production is likely not to meet the demand because the allocations for the increase are distributed to all members, including Russia, which is facing sanctions.

On Monday, Citi and Barclays raised their forecasts for crude prices for this year and next due to tight Russian supplies and a delay in the return of Iranian oil to the market.