The price for a barrel of crude oil closed higher on Monday after Saudi Arabia announced it would increase crude oil prices for Europe and Asia.
The market interpreted Saudi Arabia’s move as a signal of solid demand.
Oil prices tried to recover on Monday from last week’s biggest weekly drop since February after state producer Saudi Aramco said on Sunday it would raise prices in June for crude supplied to northwestern Europe, Asia and the Mediterranean.
Aramco set the official sales price for Arab Light to Asia for June at $2.90 per barrel above the Oman/Dubai average, compared to $2 per barrel in May. Prices for other lighter and heavier grades of crude oil to Asia were also increased. The oil producer also raised its prices in June for customers in northwestern Europe and the Mediterranean, but not for the US.
The move helped crude start the week on a “stronger footing”, said analysts Warren Petterson and Ewa Manthey of ING, after Brent fell 6.0 percent last week and WTI lost 6.9 percent, as the geopolitical risk premium associated with fears of a wider war in the Middle East were gradually eroded.
Oil prices came under pressure last week, partly in response to ceasefire talks in Cairo aimed at halting fighting in Gaza between Israel and Hamas.
Hamas said on Sunday that the latest round of talks had ended. Israeli Defense Minister Yoav Gallant claimed that Hamas was not serious about a deal and warned of “strong action in the very near future in Rafah and other places in Gaza” after Hamas attacked Israel’s main border crossing.
June crude oil futures closed $0.37, or 0.47 percent, higher at $78.48 on the New York Mercantile Exchange on Monday.
