Oil prices hit $120 a barrel following Saudi Arabia’s decision to raise crude prices for July and speculation about the increased monthly output by OPEC+ group to ease up energy supplies.
Brent crude gained 32 cents, or 0.3%, to $120.04 a barrel after touching an intraday high of $121.95.
While, US West Texas Intermediate (WTI) crude futures rose 40%, or 0.3%, at $119.27 a barrel after hitting a three-month high of $120.99.
Saudi Arabia raised the July official selling price (OSP) for its flagship Arab light crude to Asia by $2.10 from June to a $6.50 premium, the highest since May.
Last week the OPEC+ members decided to boost output for July and August by 648,000 barrels per day, or 50% more than previously planned.
Although the increase in output was implied to all members, many are not in a position to produce more, including Russia owing to impending European sanctions. As such, analysts predict output to be 160,00 bpd in July and 170,000 bpd in August.
Meanwhile, the World Bank has forecast energy prices to rise by about 50% in 2022 compared to last year. Prices are expected to remain elevated for longer than previously expected.
The World Bank in its latest Commodity Markets Outlook report has stated that the Russo-Ukraine has adversely impacted the commodity markets, offsetting global patterns of trade, production, and consumption that could keep energy prices at historically high levels through the end of 2024.
Global oil and gas prices have sharply increased in the past year, fueled by a combination of growing demand due to post-COVID economic recovery, supply constraints, and, more recently, the war in Ukraine. European gas prices are now at their highest levels ever, while global oil prices are at their highest levels in almost a decade. A EU commitment to reduce reliance on Russian oil and gas in the wake of the invasion of Ukraine meanwhile has the potential to increase gas prices further. The sudden energy price increase and corresponding inflation is putting pressure on governments to protect consumers and vulnerable households from energy poverty, by regulating or capping energy prices, introducing subsidies, or scrapping surcharges. While typically only applied for a limited time, any measures that directly reduce the price of energy would dampen incentives to reduce emissions, says World Bank.
