West Texas Intermediate (WTI) Crude Oil prices gain traction in Asian trading Tuesday, building on Monday’s rebound from the $84.00 mark, a near two-week low. The commodity climbs above the mid-$90.00s, supported by supply fears.
Iran denied it had held talks with the US to end the war, contradicting US President Donald Trump’s remarks on Monday that a deal could be reached soon. Adding to this, Mohsen Rezaei, the senior military adviser to Iranian Supreme Leader Mojtaba Khamenei, said that the war will continue until Iran receives full compensation for the damage it has sustained. This raises the risk of a further escalation of the conflict in the key oil-producing region and acts as a tailwind for the black liquid.
Moreover, energy infrastructure in Iran has reportedly come under renewed pressure. According to the Iranian semi‑official Fars news agency, a gas company office and a pressure‑reduction station were hit in Iran’s central city of Isfahan. Adding to this, a projectile reportedly struck a gas pipeline feeding a power station in Khorramshahr. This comes on top of the effective closure of the Strait of Hormuz, which has led to severe disruption of energy trade and further supports Crude Oil prices.
Meanwhile, investors remain concerned that energy-driven cost pressures could revive inflation. This, along with emerging bets for an interest rate hike by the US Federal Reserve (Fed), triggers a fresh leg up in US Treasury bond yields. Adding to this, a generally weaker tone helps revive demand for the safe-haven US Dollar (USD), which tends to undermine USD-denominated commodities, and could cap gains for Crude Oil prices, warranting some caution before placing aggressive bullish bets.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
