Meanwhile, high prices help make Saudi Aramco world's most valuable company File Image/Pixabay
In what has become the norm for crude traders, concerns on Monday over demand due to the China Covid lockdowns quickly changed to fear of tight global supplies because of the impending busy summer driving season, and prices for oil rallied above $112 per barrel.
Brent rose $1.34 at $112.89 per barrel at 1342 GMT, while West Texas Intermediate rose $2.22 to $112.71 per barrel.
Also, the prompt spread of difference between contracts for immediate delivery and those in the future widened to as much as $2.45, the largest gap since March.
Prince Abdulaziz bin Salman, energy minister, Saudi Arabia
There is no refining capacity commensurate with the current demand
While the global shortage has exacerbated record high prices at the pump, prince Abdulaziz bin Salman, energy minister for Saudi Arabia, on Monday shattered the claims of vote-trolling politicians by pointing out that a lack of refining capacity means that gasoline and other oil products would remain expensive even if more crude was pumped.
He said, "There is no refining capacity commensurate with the current demand and the expectation of the demand in the summer."
Sheikh Mohammed Bin Khalifa Bin Ahmed, oil minister for Bahrein, added, "There's no new capacity coming….even if you produce more crude there isn't demand for it, there aren't any more refineries."
As for the China lockdowns that caused traders to send oil prices plummeting earlier in Monday's trading, that too may soon become a non-issue as Shanghai reported a second day of no Covid cases outside quarantine (it takes three days of zero community transmission for the government to start easing restrictions).
Bob Yawger, director of energy futures at Mizuho, remarked, "We are seeing a lot of signals that demand will start returning in that region, supporting higher prices."
Still, the brutal lockdowns stemming from a zero-tolerance approach to the virus has had its impact: China's retail sales dropped by 11.1 percent in April compared to 2021, the worst decline since March 2020, and industrial production dropped by 2.9 percent compared to the same month last year.
In related energy news on Monday, state-owned Saudi Aramco reported an 82 percent jump in net profits to $39 billion for the first quarter of this year, up from $21.7 billion over the same period last year.
Saudi Aramco's market cap of about $2.43 trillion has caused it to surpass Apple as the world's most valuable company, as earnings from peers such as BP and Shell have hit their highest level in years despite being impacted for exiting operations in Russia.