(Bloomberg) Oil surged after Saudi Arabia raised prices for its crude globally.Futures in London added as much as 7.1%, moving beyond $31 a barrel, while U.S. crude rose 11%. State-run Saudi Aramco, which earlier this year initiated a war by offering massive discounts on its crude, raised prices on almost all grades for June. The move comes as the kingdom and its OPEC+ partners embark on record production cuts in a bid to balance a glutted market.“The higher prices by Aramco suggest a recovery of demand,” said Hans van Cleef, senior energy economist at ABN Amro.
The OPEC+ coalition that includes Russia started implementing output cuts of 9.7 million barrels a day this month. The move follows a record build-up in inventories as demand was ravaged by the coronavirus outbreak that has seen oil tanks filling up globally. There have been tentative signs from China to Germany and Florida that demand for fuel — particularly gasoline — is starting to pick up.
Prices:
Brent for July settlement added $1.84, or 6.2%, to $31.56 a barrel as of 1:42 p.m. London time
West Texas Intermediate rose 9.4% to $26.24 a barrel
Some of the biggest moves in Saudi oil pricing came for refiners in Europe and the Mediterranean, also the main market for Russian crude. It’s possibly a sign that the price and market-share wars are easing after Riyadh and Moscow agreed last month to work together again as part of the OPEC+ alliance. Prices in those regions were hiked by between $5.80 and $7.50 for June, according to the price list.
“The price increase suggests Saudi Arabia will not just cut their production as part of the OPEC deal, but also reduce their crude exports by making them more expensive,” said Giovanni Staunovo, commodity analyst at UBS Group AG.
Other oil market news:
Hess Corp. is chartering a trio of supertankers to hold its North Dakota crude production as rapidly filling storage forces some drillers to curtail output.
Enbridge Inc., North America’s largest pipeline operator, is cutting jobs, lowering executive pay and deferring some capital spending as measures to fight the Covid-19 virus reduce oil flows on its system and slow down construction.
Norway’s Equinor ASA scrapped its production-growth target for 2020 after profit dropped by 63% in the first quarter.
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