Saudi Arabia: Crude oil prices jumped higher than ever after Saudi Arabia stated its confidence in demand by increasing the prices of its crude by more than expected for Asia. West Texas Intermediate traded approximately US$ 120 per barrel after increasing to its highest level in over three months. Saudi Arabia surged its official selling prices mainly for consumers living in Asia in July. This occurred as China, which is considered to be the largest crude oil importer worldwide emerged from stringent COVID-19 lockdowns that have degraded the country’s economy.
In the United States, the fuel industry declined at a considerable pace just as the summer season began. New York is expected to hit a new high in future with the rising prices of retail gasoline in the city.
Saudi Arabia’s high barrel prices came in during a tight supply even though the Organization of the Petroleum Exporting Countries (OPEC+) agreed to boost output surges over the next few months. After touching nearly US$ 121.95, Brent crude was up by 0.8 percent or 91 cents at 0343 GMT.
The country increased the Official Selling Price (OSP), especially for its in-house Arab light crude to a US$ 6.50 premium to Asia, versus the average of the Dubai and Oman benchmarks. It was a US$ 4.40 premium in June, mentioned one of the experts in Aramco, a Saudi Arabian public petroleum and natural gas firm.
This year, oil has increased nearly 60% because of the tightening market following Russia’s invasion of Ukraine and high demand from countries recovering from the COVID-19 pandemic. The battle further prompted central banks to reduce their monetary policies, as well as surge the cost of everything- right from fuel to food due to this inflation.
Moreover, OPEC+ has agreed to boost output following repeated appeals from the United States last week to pump out more. The cartel further disclosed that it is planning to include 648,000 barrels every day in July and August, which is a 5% increase in recent months.
The price of crude oil propelled at a robust pace in the sessions that took place earlier. It came in a few pips of consumers’ hoped-for target of US$ 120 per barrel. But, the price grew at present with a rapid decline to test 117.30. It is anticipated to get back to initiating the bullish bias. It implies that the price of crude oil is expected to open new avenues to US$ 125 a barrel and surpass the mentioned target.
However, the fuel market has struggled to meet its existing supply targets, thereby creating concerns about its capability to achieve new goals in future. As a result, several market pundits have started recommending a new trend for the forthcoming years, mentioning that a new breach of US$ 117 per barrel will soon create pressure on the price to achieve correction in future.
Unless the inflation is brought under control, it will be difficult for the fuel industry to sustain in the market with low prices.