By Barani Krishnan
Investing.com -- Oil jumped its most in a week since May 2020 as Saudi Arabia announced a record hike in its selling prices, while the escalating Ukraine war and the West’s retaliation with more sanctions on major energy exporter Russia further fueled the crude rally on Friday.
Just a day ago, prices cooled somewhat after expectations that Iranian supplies might return legitimately to the market soon helped tamp down a spike in U.S. crude to 2008 highs and Brent to 2012 peaks.
Saudi Arabia’s state-owned oil company Aramco (SE:2222) announced the highest hike ever in the official selling price, or OSP, to Asia, raising the premium for a barrel of Arab light crude meant for April delivery by $4.95 versus the Oman/Dubai average, which it uses as a base.
Aramco said its April Arab light crude oil OSP to the US would go up by $3.45.
The lowest increase was for North West Europe, where the premium for April Arab light crude rose by $1.60 versus Brent, which hovered at $114 a barrel.
“This is what you call naked exploitation,” John Kilduff, partner at New York energy hedge Again Capital, said, referring to Aramco's record price hike. “We know it’s business. But at a time when the world is in a dire emergency over the Russia-Ukraine crisis and the need for affordable and higher oil supplies is more than ever, we know we can also count on the Saudis to throttle our necks more than ever.”
U.S. crude’s West Texas Intermediate, or WTI, benchmark was up $4.13, or 3.8%, at $111.80 a barrel by 1:00 PM ET (18:00 GMT).
On Thursday, WTI surged to $116.57, its highest since September 2008. Week-to-date, the U.S. crude was up about 21%, heading for its biggest weekly gain since May 2020.
Global oil benchmark Brent was up $3.79, or 3.4%, at $114.25 a barrel. Brent peaked at $119.78 on Thursday for its highest since May 2012. Week-to-date, Brent was up 16%, heading for its biggest weekly gain since May 2020.
WTI has risen some 50% since the year began and Brent about 48%. Crude’s rally saw a dramatic surge this week on worries that a litany of sanctions against Russia for its invasion of Ukraine would severely impact energy exports from Moscow, which provides some 10% of the world’s oil needs and 40% of Europe’s gas requirements.
Crude prices briefly retreated on Thursday after headlines suggested brisk progress in talks between Iran and global powers to reactivate Tehran’s 2015 nuclear deal that could free the Islamic Republic itself from U.S. sanctions on its oil.
Iranian media quoted Mikhail Ulyanov, Russia’s chief negotiator at the nuclear talks, as saying an agreement was likely over the next few days, paving way for the legitimate return of Tehran’s oil to the market.