© Reuters. FILE PHOTO: A drilling rig operates in the oil and natural gas production area of the Permian Basin in Lea County, New Mexico, US, Feb. 10, 2019. REUTERS/Nick Oxford/File Photo
By Shadia Nasralla
LONDON (Reuters) – Oil prices fell Monday after hitting $120 a barrel as Saudi Arabia raised the price of crude oil for July.
Crude oil slumped amid doubts that OPEC+ oil producers’ decision last week to raise their monthly production target would translate into a surge in production needed to mitigate the tight supply.
fell 52 cents, or 0.4%, to $119.20 a barrel at 1240 GMT after hitting an intraday high of $121.95.
US West Texas Intermediate (WTI) crude futures fell 54 cents, or 0.5%, to $118.33 a barrel after hitting a three-month high of $120.99.
Saudi Arabia increased the July official selling price (OSP) for its flagship Arab light crude from June by $2.10 to a premium of $6.50, the highest since May, when prices hit a record high amid concerns over disruption of supplies from Russia.
The price hike followed a decision last week by the Organization of the Petroleum Exporting Countries and allies, collectively called OPEC+, to increase production for July and August by 648,000 barrels per day, or 50% more than previously planned.
The increased target was spread across all OPEC+ members, but many of them have little room to increase production, including Russia, which faces Western sanctions.
“With just a handful of… OPEC+ participants with spare capacity, we expect OPEC+ output surges to be about 160,000 barrels per day in July and 170,000 barrels per day in August,” JP Morgan analysts said in a note. .
On Mondays, Citibank and Barclays (LON:) have raised their price forecasts for 2022 and 2023, saying they expected Russian production and exports to fall by about 1-1.5 million barrels per day by the end of 2022.
Separately, Italy’s Eni and Spain’s Repsol (OTC:) could begin shipping small amounts of Venezuelan oil to Europe next month, five people familiar with the matter told Reuters.