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On June 12, Bank of Korea Governor Shin Hyun-song warned that the central bank cannot lag behind the curve in controlling inflation. This statement sends a clear signal that policymakers are feeling an increasing urgency to act sooner rather than later. Shin stated that concerns about inflationary pressures have increased as the Middle East conflict continues. This comment is likely to reinforce market expectations that the Bank of Korea will resume its tight monetary policy as early as next month. The current Iranian crisis is pushing up energy prices and disrupting supply chains. Shin also stated that, overall, the current dynamics regarding growth, inflation, and financial stability point relatively clearly from a monetary policy perspective. While the central bank governor needs to consider multiple factors, it is crucial to avoid acting too late when price stability is threatened. Even if cost-easing measures alleviate some of the pressure, South Koreas inflation may remain above the target level for an extended period.German government officials said they expect the EU summit to instruct the European Commission to revise its toolkit for dealing with unfair trade practices.Nomura Securities predicts that the European Central Banks terminal interest rate will rise to 3.00% by March 2027—the most hawkish forecast in the market consensus, 40 basis points higher than the current market price.A Ukrainian defense source said that Ukraine will request an additional $20 billion in military spending from its allies next week to consolidate its battlefield advantage over Russia.ECB Governing Council member Mollan stated that this weeks rate hike aims to curb a second wave of inflationary pressures. The ECB is taking inflationary pressures seriously.

Oil Prices Rise Following Saudi Arabia's Raise in Crude Oil Prices

Aria Thomas

Jun 06, 2022 10:54

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Oil prices were up in Asia on Monday morning after Saudi Arabia sharply increased the price of its crude sales in July, a warning that supplies remain tight despite OPEC+'s agreement to accelerate output growth over the following two months.


Brent oil futures increased 0.62 percent to $120.46 around 10:06 p.m. ET (2:06 a.m. GMT), while WTI crude oil futures increased 0.67 percent to $119.42.


Saudi Arabia increased the official selling price (OSP) for its flagship Arab Light crude to Asia to a $6.50 premium above the average of the Oman and Dubai benchmarks, up from a $4.40 premium in June, according to Saudi Arabian national oil company Aramco (TADAWUL:2222).


The decision was made despite a request by the Organization of Petroleum Exporting Countries and its partners, known collectively as OPEC+, to boost production in July and August by 648,000 barrels per day, or 50 percent more than had been planned.


"After opening the taps a bit wider, Saudi Arabia lost little time increasing its official selling price for Asia, its key market," said Stephen Innes, managing partner at SPI Asset Management, in a note. "This had knock-on consequences at the futures open across the oil market spectrum."


Saudi Arabia also raised the Arab Light OSP to northwest Europe for July to $4.30 over ICE (NYSE:ICE) Brent, up from $2.50 in June. However, it maintained the premium for U.S.-bound barrels at $5.65 over the Argus Sour Crude Index (ASCI).


As numerous member nations, notably Russia, are unable to increase output, it is commonly believed that the OPEC+ plan to increase supply will not meet demand. During the peak driving season in the United States, demand is surging, and China is reducing COVID restrictions.


In light of the EU's partial embargo on Russian oil imports, this increase falls short of estimates for demand growth, said Commonwealth Bank analyst Vivek Dhar.


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