Oil Prices Increase as Saudi Arabia Raises Crude OSP in Asia

Oil prices rose on Monday as Saudi Arabia raised June crude selling prices across Asia, and a ceasefire deal between Israel and Hamas became more unlikely, sparking concerns about a possible escalation of the war in the Middle East.

Brent crude oil futures for July delivery gained 0.35% to $83.25 per barrel, following a 7.0% slide last week, the largest since February.

The US West Texas Intermediate (WTI) crude futures expiring in June added 0.38% to $78.41 per barrel, having posted their sharpest weekly loss in three months of 6.8% the week prior.

The two benchmarks’ were weighed by investors absorbing a fewer-than-expected US employment of 175,000 in April, which reinforced interest rate cuts prospect for the Federal Reserve.

Saudi Arabia Hikes OSPs, Hopes for Gaza Truce Weakens

The surge came as state-owned oil giant Saudi Aramco increased the official June selling prices (OSP) of Arab Light crude in Asia by $0.90 to $2.90 per barrel, the highest since January and ending over the Oman-Dubai average for the same month.

The company also hiked the June OSPs in Northwest Europe and the Mediterranean to $2.10 and $2.00 per barrel, respectively. The OSP in the US was unchanged at $4.75 per barrel.

The rise underscored Saudi Arabia’s attempts to maintain a tight oil market amid an easing war risk in the top oil-producing region, which has weakened crude prices in London.

Markets have also reduced the geopolitical risk premium on the progress of negotiations about ending the Israel-Hamas war.

However, the potential for a Gaze ceasefire accord weakened on Sunday. Israel Prime Minister Benjamin Netanyahu stated that he would not accept a truce as part of a hostage deal as it would maintain Hamas’s control over the Palestinian city.

Netanyahu said the rebel group’s demand for Israel to withdraw from Gaza completely was “out of the question,” with the Israeli Prime Minister vowing to enter Rafah “with or without a deal.”

On the supply side, signs of tightening came as Baker Hughes Co. reported on Friday that US energy firms cut the number of active oil and natural gas rigs by seven to 499 last week, marking the second straight week of drop and the largest weekly reduction since November 2023.