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Oil futures jump as Saudi Arabia hikes crude prices

Brent crude

Brent crude futures added 73 cents, or 0.9 per cent, to $83.69 a barrel, while U.S. WTI crude futures were at $78.95 a barrel, up 84 cents, or 1.1 per cent

Oil futures jumped on Monday after Saudi Arabia raised June crude prices for most regions and as the prospect of a Middle East ceasefire deal appeared dim, renewing concerns the conflict could still widen in the key oil producing region.

Brent crude futures added 73 cents, or 0.9 per cent, to $83.69 a barrel at 0852 GMT, while U.S. West Texas Intermediate (WTI) crude futures were at $78.95 a barrel, up 84 cents, or 1.1 per cent.

Last week, both futures contracts posted their sharpest weekly loss in three months with Brent dropping more than 7 per cent and West Texas Intermediate down 6.8 per cent, as investors weighed weak U.S. jobs data and the possible timing of a Fed interest rate cut.

The geopolitical risk premium in oil prices also eased as talks for a Middle East ceasefire were underway.

News that Israel wants to go ahead and extend its operation into Rafah, risks derailing a potential ceasefire agreement and reigniting Middle Eastern geopolitical tensions which had seemed to be easing, according to IG markets analyst Tony Sycamore.

Also supporting oil was Saudi Arabia’s move to hike the official selling prices (OSPs) for its crude sold to Asia, Northwest Europe and the Mediterranean in June, indicating expectations of strong demand this summer.

This comes after Saudi Arabia raised June official selling prices for most regions amid a tightening of supplies this quarter, he said.

In China, the world’s biggest crude importer, services activity remained in expansionary territory for the 16th consecutive month, while growth in new orders accelerated and business sentiment rose solidly, bolstering expectations of a sustained economic recovery.

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