Oil prices experienced on Monday a slight increase following Saudi Arabia’s decision to raise crude prices for most regions in June. Additionally, concerns arose over the possibility of a Gaza ceasefire deal, which seemed unlikely, reigniting fears of a potential escalation in the Israel-Gaza conflict, thereby impacting the oil-producing region.
During the early morning hours at 01:19 GMT, Brent crude futures rose by 28 cents, or 0.3 percent, reaching $83.24 per barrel. Simultaneously, U.S. West Texas Intermediate crude futures climbed to $78.40 per barrel, showing a 29-cent increase, or 0.4 percent.
Saudi Arabia’s decision to raise the official selling prices (OSPs) for its crude sold to Asia, Northwest Europe, and the Mediterranean in June indicated its expectation of robust demand during the summer season.
Warren Patterson, ING‘s head of commodities research, noted in a statement that ICE Brent had a stronger start to the new trading week, opening higher, after experiencing a decline of slightly over 7.3 percent the previous week due to reduced geopolitical tensions. He also highlighted the tightening of supplies in the current quarter as a reason for Saudi Arabia’s increase in June OSPs for most regions.
Read more: Oil prices edge up on prospects of OPEC+ maintaining output cuts
Last week, both Brent and WTI futures contracts recorded their largest weekly losses in three months. Brent fell by over 7 percent, and WTI decreased by 6.8 percent as investors assessed weak U.S. jobs data and speculated about the timing of a potential Federal Reserve interest rate cut.
The geopolitical risk premium affecting oil prices has somewhat diminished as negotiations for a Gaza ceasefire are in progress.
A report published by Baker Hughes on Friday revealed that U.S. energy companies reduced the number of operating oil and natural gas rigs for the second consecutive week. Oil rigs decreased by seven to a total of 499, marking the most significant weekly drop since November 2023. This development suggests a potential tightening of supply in the market.
For more news on markets, click here.
