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Bloomberg News reported that Saudi Arabia has made some of the” biggest price increases for crude exports in at least two decades, doubling down on its strategy to bolster the oil market after OPEC+ producers extended historic output cuts.’

Lead paragraphs

The steepest jump will hit July exports to Asia, state producer Saudi Aramco’s largest regional market, according to a pricing list seen by Bloomberg. Overall, the increases for Saudi crude erase almost all of the discounts the kingdom made during its brief price war with Russia.

The sharp price increases show that Saudi Arabia is using all the tools at its disposal to turn around the oil market after prices plunged into negative territory in April. As the price setter in the Middle East, the increases in its official prices may be followed by other producers.

Tighter crude supply is helping repair an oil market battered by the coronavirus. Unprecedented output cuts led by the Saudis and Russia boosted prices in May, and the OPEC+ group decided Saturday to extend those limits through July. Brent crude, down 36% this year, has clawed back some of its losses and ended trading on Friday at more than $40 a barrel.

OPEC+ chose on Saturday to renew production limits at almost the same level, instead of tapering them as planned at the end of June.

Market implications

Production limits will help to set the tone in the physical oil market, where actual barrels change hands and support prices. WTI is on the verge os breaking into the $40 handle.