WTI price slumps to near $63.80 in Tuesday’s early Asian session.
Traders will closely monitor the developments surrounding tensions between the US and Iran.
The US advised ships to avoid Iran.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $63.80 during the early Asian trading hours on Tuesday. The WTI price falls as concerns about supply disruptions in the Middle East have faded. Traders brace for the release of the American Petroleum Institute (API) weekly report, which will be released later on Tuesday.
An increase in crude exports from Venezuela could boost global oil supplies and weigh on the WTI price. Reuters reported last Monday that Venezuelan crude exports climbed to 800,000 barrels per day (bpd) in January from 498,000 bpd in December.
The black gold loses momentum after the United States (US) and Iran pledged to continue indirect talks following what they described as positive discussions. Iran’s President Masoud Pezeshkian described the Friday nuclear talks with the US as “a step forward,” even as he pushed back against any attempts at intimidation.
However, an escalation of geopolitical risk in the Middle East could add a risk premium to crude oil, supporting the WTI price. The US Department of Transportation on Monday issued a maritime advisory stating that American-flagged ships should stay as far as possible from Iranian waters when navigating the Strait of Hormuz, per Reuters. The Iranian foreign minister said that the country will strike US bases in the Middle East if it is attacked by US forces.
“The Iranian risk premium cannot be fully defused as long as U.S. warships are located where they are,” said SEB analyst Bjarne Schieldrop.
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