Oil Prices Surge Amid Gaza Truce Doubts, Saudi Price Hike
Oil prices have increased following Saudi Arabia's decision to raise the official selling prices (OSPs) for its crude oil sold to various regions including Asia, Northwest Europe, and the Mediterranean for the month of June. This adjustment by the world's largest oil exporter suggests that the kingdom is seeing strong demand for its oil.
The rise in oil prices has also been influenced by the escalation of geopolitical tensions in the Middle East, particularly due to the ongoing conflict between Israel and Hamas. As cease-fire talks stall and Israel orders evacuations in Rafah, concerns grow about the potential for a wider conflict. The geopolitical risk premium in oil has been further affected by Israel's stance, with Prime Minister Benjamin Netanyahu stating that Israel will not bow to international pressure to end the war in Gaza until Hamas is defeated.
In financial markets, Brent crude traded at $83.56 per barrel, reflecting a 0.72 percent increase, while West Texas Intermediate (WTI) saw a 0.78 percent rise to $78.72 per barrel. The price increases also come amidst market predictions that the U.S. Federal Reserve may adjust interest rates later in the year, with September being a potential target for a rate change.
The price surge is notable as it follows a significant drop the previous week, with Brent crude falling over 7% and WTI down by 6.8%, marking the steepest weekly loss in three months. The shift in oil prices is being closely monitored by investors, who are also considering the impact of other factors such as weak U.S. job data and the possibility of a Federal Reserve interest rate cut.
