Due to the lockdown caused by the COVID-19 pandemic, non-essential travels have been banned. As a result, the demand for fuel dropped significantly and investors are now seeing massive fuel price cuts because oil companies are forced to stop pumping.

Since no one is buying fuel and storing crude oil would cost a lot of money, producers have to sell at bargain prices. But as the lockdowns slowly ease and with restrictions on non-essential travels starting to be lifted, Saudi Arabia jacks up the price of crude oil at an all-time high -- the highest traders have seen in at least two decades. 

Bloomberg said that the highest crude oil prices would be felt in the July export on Saudi Aramco's biggest market, Asia. This price hike almost completely negates all the discounts on crude oil prices that Saudi made while on a crude oil price war with Russia.

The steep and sudden price increase only means one thing: Saudi Arabia is doing whatever it can in order to completely turn around the oil industry after the struggles it went through at the peak of travel bans in April. As Saudi is one of the largest crude oil producers in the globe, other oil players would inevitably follow suit.

In May, the world's two largest crude oil producers -- Saudi and Russia -- made significant output cuts to limit the supply of crude oil to help reduce damage to the oil industry which is hit hard by the global crisis. This year, the supply of crude oil is down by 36 percent and the Kingdom has agreed to continue limiting the outputs until next month.

Despite the rising demand for crude oil and the profits for producers, the same couldn't be said for the refineries that process the crude oil and turn it into usable forms of fuel like diesel and gasoline, and the price increase imposed by Saudi might aggravate this problem for them. Refineries in Asia and Europe already expressed their concerns that huge price increases would further reduce their profits.

As the demand in China also begins to increase, Saudi starts increasing prices too. The price of the Arab light crude that is sold in Asia which add up to more than 50% of Saudi's oil sales is at an all time high in at least 2 decades. The price of all grades of crude oil starting July in Asia would increase an average of about $4 per barrel, that would result to around $5.60 up to $7.30 per barrel depending on the grade.