Brent Crude Hits $76 as Saudi Arabia’s Price Increase and Supply Constraints Drive Up Oil Costs

Saudi Arabia’s tightening grip on the Middle Eastern oil market has driven crude prices to nearly three-month highs as the kingdom raises its official selling prices.

Brent crude reached approximately $76 per barrel on Monday, its highest level since mid-October, while West Texas Intermediate crude traded at around $74. Saudi Arabia has announced a 60-cent-per-barrel price increase for its flagship Arab Light crude for Asian buyers next month.

This development follows a surge in Oman and Dubai crude prices late last year, driven by supply constraints from Iran and Russia. Other benchmark futures have also gained strength recently.

Warren Patterson, head of commodity strategy at ING Group, commented, “The physical market in the Middle East appears to be driving oil prices. Lower flows from Iran and Russia have pushed Asian buyers to look for alternatives.”

Oil prices broke out of their mid-October trading range last week, supported by President-elect Donald Trump’s return to the White House. This contributed to lower U.S. reserves and increased market uncertainty.

Morgan Stanley analysts, including Martijn Rats, forecast that Brent crude will likely stabilize at around $70 per barrel. However, the firm predicts that increased supply from OPEC and non-OPEC producers will outpace demand growth, leading to a surplus of approximately 700,000 barrels per day this year.

Despite this outlook, concerns persist over oversupply, the potential reactivation of idle OPEC+ production, and weaker demand from China, a major importer.