Oil rebounds more than $1/barrel after Saudi price hike

Singapore, Dec. 6 (BNA): Oil prices rose by more than $1 a barrel today, Monday, after Saudi Arabia, the largest oil exporter, raised the prices of its crude sold to Asia and the United States, and indirect talks between the United States and Iran on reviving a nuclear deal. It seems to have hit a dead end.

Brent crude futures for February rose $1.39, or 2%, to $71.27 a barrel by 0458 GMT, while US West Texas Intermediate crude for January reached $67.66 a barrel, up $1.40, or 2.1%.

On Sunday, Saudi Arabia raised the official selling prices for the month of January for all grades of crude sold to Asia and the United States by up to 80 cents from the previous month, according to Reuters.

The price increases were implemented despite a decision last week by the Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, the group known as OPEC+, to continue increasing supplies by 400,000 barrels per day in January.

Prices were also boosted by dwindling prospects for an increase in Iranian oil exports after indirect US-Iranian talks on salvaging the 2015 Iran nuclear deal stalled last week. European officials on Friday expressed their dissatisfaction with sweeping demands of Iran’s hardline new government. Talks are expected to resume in the middle of this week.

“While the (OPEC +) group emphasized that the decision was based purely on market fundamentals, it is difficult not to see the hand of the United States playing a role, especially given the visit this week of a US delegation to the kingdom,” JBC Consulting said. Energy said in a note.

“It is almost certain that the Iranian situation has been discussed, and Saudi Arabia’s agreement to increase production suggests that a compromise has been reached and that an improvement in relations with the Biden administration is imminent,” he added.

The consultancy said that despite the planned increase, Russia’s total production failed to rise because major producers may face technical difficulties in raising production in line with the existing agreement.

Both benchmarks rebounded after falling last week for the sixth consecutive week for the first time since November 2018 on concerns that a new alternative to the coronavirus could affect global economic growth and increase demand.

In another sign of the turmoil unleashed by the ever-changing pandemic, the head of the International Monetary Fund said the World Bank is likely to lower its estimate of global economic growth due to the new alternative.

Consulting firm JBC Energy has revised its base case crude oil demand forecast for December and January by about 300,000 barrels per day.

She added that the revision had eliminated most of the supply tightness that the market had experienced before.

Omicron has spread to about a third of US states as of Sunday.

HF