Oil jumps on OPEC+ deal and Saudi pricing

Crude oil prices continued to trade above US$120/bbl on Tuesday too, extending their gains after recording three consecutive weekly gains. The significant rise in crude oil prices has been witnessed after Saudi Arabia decided to raise the prices for its crude sales in July amid tight supplies. The significant move by one of the largest oil producers comes despite OPEC+ agreed to accelerate output increases over the next two months.

The prices were additionally buoyed due to a robust recovery in energy demands in China as the nation eases its COVID-19 restrictions in Shanghai.

Additionally, a solid travel demand amid the peak US driving season has also been pushing fuel demand and ultimately buoyed oil prices.

On Sunday, the state oil producer Aramco stated that Saudi Arabia increased its official selling price (OSP) for its flagship Arab light crude to Asia by US$2.10 from June to US$6.50. The OSP reached the highest level since May when the prices hit all-time highs due to the mounting supply concerns over Russia's oil sanctions for its invasion of Ukraine.

The prices of both oil benchmarks gained more than 67% in the last one year with WTI crude oil futures gaining as much as 71.53% in the same period.

Also Read: Crude oil surges to 14-year highs on delays in Iranian talks

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On Monday, Brent Crude oil settled at US$119.51/bbl and WTI crude oil settled at US$118.50/bbl, down 0.2% and 0.3% respectively.

On Tuesday, August delivery Brent Crude oil futures gained and last traded at US$120.07 per barrel up 0.47%, while July delivery WTI crude oil futures exchanged hands at US$119.17 per barrel, up 0.57% at 1:06 PM AEST.

Must Watch: As Russia-Ukraine War Intensifies, Commodities Also Soars

OPEC+ decides to boost output

The significant rise in both crude oil benchmarks has been witnessed despite the Organization of the Petroleum Exporting Countries (OPEC) and allies, together known as OPEC+ deciding to boost output in July and August by 648,000bpd.

The decision of OPEC+ comes as the world's biggest producers are not able to ramp up their production, in line with a solid recovery in energy demand after pandemics.

On Friday, Iraq said that it aims to raise output to 4.58 Mbpd in July.

Also Read: Crude oil slides from multi-year highs as Iran talks rev up

Bottom Line

Crude oil prices rose on Tuesday, extending last week's rally on prospects of higher demand as China eases lockdown. The gains in both oil benchmarks come despite OPEC+ decision to boost its output in the coming months.

Here’s how commodities performed in the last week click here