Saudi Arabia hikes oil prices sharply, sending US crude futures up to a 3-month high

• Saudi Arabia hiked prices for customers in Asia, northwestern Europe, and the Mediterranean.
• Aramco's price hikes sent Brent and US WTI crude futures up as much as 2%.

Saudi Arabia has raised selling prices sharply for its crude oil prices in July, sparking a rise in oil futures on Monday.

Saudi Arabia's Aramco, the world's largest oil exporter, hiked prices for customers in Asia, northwestern Europe, and the Mediterranean. Prices for US customers were unchanged.

Aramco on Sunday raised the price for its key Arab Light crude for Asia, where its largest customer base is located, to $6.50 above a benchmark it uses — above a premium of $4.40 in June, according to Reuters. The July premium is 10% higher than what market participants polled by Bloomberg were expecting.

Even though Aramco's prices for the US remain unchanged, its hikes for other markets spilled into the international markets amid red-hot consumer inflation. US benchmark West Texas Intermediate (WTI) rose as much as 1.8% to hit a three-month high, while Brent crude oil futures also rose as much as 2% on Monday morning in Asia.

Aramco's price hikes came despite a decision last week by the Organization of the Petroleum Exporting Countries and its allies (OPEC+) to boost output in July and August by 648,000 barrels per day — 50% more than its production increase in recent months. However, the increased OPEC+ production isn't enough to offset Russian oil shut out of the global market due to sanctions and boycotts, the CEO of share giant Hess told Insider's Phil Rosen last week.

Aramco's price hikes suggest a stronger demand outlook, particularly for Asia, where pandemic lockdowns are easing, said Vishnu Varathan, the head of economics and strategy at Mizuho Bank.

"OPEC producers have been struggling to increase output even as curbs have been relaxed and output ceiling has been raised," Varathan wrote in a Monday note seen by Insider. "Fact is, outside of Saudi and the UAE, there may be very little to increase supply adequately to tame oil prices," he added, referring to the United Arab Emirates.