Oil prices recently reached a cost of $120 per barrel earlier this week, Reuters reported. In response to the increase of oil cost, Saudi Arabia has raised its price ranges for its flagship Arab light crude to Asia to $2.10 to $6.50.
“The increased target was spread across all OPEC+ members, however, many of which have little room to increase output and which include Russia, whichfaces Western sanctions,” the Reuters report states.
The increase comes as Saudi Arabia opted to raise crude prices for the month of July “amid doubts that an increased OPEC+ monthly output target will help ease tight supply,” a recent Reuters report states. The figure is the highest it’s been since May, when prices reached record highs amid the disruption in supplies from Russia.
Brent Crude’s contribution summed up to be 32 cents, or 0.3%, to $120.04 a barrel at 0858 GMT after engaging with an intraday high of $121.95. U.S. West Texas Intermediate recently reported its crude futures to be up 40 cents, equivalent to 0.3%, which placed barrels at $119.27 after hitting a three-month high of $120.99.
The price modification came after the Organization of the Petroleum Exporting Countries increased the output for July and August to 648,000 barrels per day.
Citibank and Barclays raised their forecasts earlier this month for 2022 and 2023, adding that they project exports to decrease by approximately 1-1.5 million bpd by the end of 2022. Similarly, European companies plan to ship small volumes of Veneuelan oil to Europe next month.
"With only a handful of OPEC+ participants with spare capacity, we expect the increase in OPEC+ output to be about 160,000 barrels per day in July and 170,000 bpd in August," JP Morgan analysts said.