Oil Prices Rise as Saudi Arabia Increases June Crude Prices and Gaza Ceasefire Talks Stall
Oil futures surged on Monday after Saudi Arabia raised its official selling prices (OSPs) for most regions, including Asia, Northwest Europe, and the Mediterranean, for June. This move signaled strong demand expectations for the summer. Additionally, the prospect of a Gaza ceasefire deal appeared slim, renewing fears that the Israel-Hamas conflict could escalate in the key oil-producing region.
Brent crude futures rose by 77 cents, or 0.9%, to $83.73 a barrel at 1055 GMT, while U.S. West Texas Intermediate crude futures increased by 87 cents, or 1.1%, to $78.98 a barrel.
Last week, both futures contracts experienced their steepest weekly loss in three months, with Brent falling more than 7% and WTI down 6.8%, as investors weighed weak U.S. jobs data and the potential timing of a Federal Reserve interest rate cut. However, the geopolitical risk premium in oil prices eased as talks for a Gaza ceasefire were underway.
However, prospects for a deal faded as Hamas reiterated its demand for an end to the war in exchange for the freeing of hostages and Israel appeared poised to launch a long-threatened assault in the southern Gaza Strip. Israel’s military called on Palestinian civilians to evacuate Rafah as part of a “limited scope” operation, which could derail a potential ceasefire agreement and reignite Middle Eastern geopolitical tensions.
IG markets analyst Tony Sycamore commented, “News that Israel wants to go ahead and extend its operation into Rafah risks derailing a potential ceasefire agreement and reigniting Middle Eastern geopolitical tensions which had appeared to be easing.”
In other news, services activity in China, the world’s largest crude importer, remained in expansionary territory for the 16th consecutive month, with growth in new orders accelerating and business sentiment rising solidly. This boost in economic recovery hopes also supported oil prices.
Source: reuters.com
