WTI falls below $81.00 as Iran-Oman talks fuel hopes of Hormuz reopening
- WTI price tumbles to near $80.90 in Thursday’s early European session.
- Iran and Oman are working to finalize an agreement governing the Strait of Hormuz.
- US crude inventories increased by 95,000 barrels in the week ending August 21, EIA showed.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $80.90 during the early European trading hours on Thursday. WTI slumps as hopes grow for a reopening of the Strait of Hormuz amid diplomatic efforts involving Iran and Oman.
Bloomberg reported on Wednesday that the Islamic Revolutionary Guard Corps (IRGC) stated that it reached a revenue-sharing agreement with Oman on the critical waterway. The development goes further than a joint statement issued by the two countries’ foreign ministries on Tuesday, which said they discussed an “interim framework” for resuming ship transits but stopped short of announcing an agreement and didn’t mention fees.
Iran also warned that a reopening of the critical waterway will take more than a deal with Oman. Qatar’s Prime Minister will go to Iran on Thursday to restart diplomatic discussions aimed at ending the conflict, which has now lasted nearly six months.
Nonetheless, the US and Iran remain far apart on the conditions for ending the fighting. Earlier this week, Washington threatened damaging new sanctions on countries that refuse to cut economic ties with Iran. US Treasury Secretary Scott Bessent also warned that groups helping Tehran launder money face expulsion from the US financial system. Any signs of rising tensions between the US and Iran could raise fears of oil supply disruption and boost the WTI price.
US crude oil inventories see a modest weekly build. According to the US Energy Information Administration (EIA), crude oil stockpiles in the US for the week ending August 21 increased by 95,000 barrels, compared to a surge of 4.405 million barrels in the previous week. The market consensus was for a rise of 1.9 million barrels.
Oil eases as Strait of Hormuz risks recede, Wall Street slips
Strategists at UOB Group highlight that “oil prices declined on continued optimism over a resolution in the Strait of Hormuz, while Wall Street closed modestly lower overnight.” The bank notes that easing geopolitical tensions in this key shipping lane have weighed on crude benchmarks, even as US equities softened in the latest session.
Technical Analysis: WTI remains capped under the 100-day SMA
In the daily chart, WTI US Oil holds a bearish near-term bias as price sits below the 100-day simple moving average (SMA) and the Bollinger Bands 20-period middle band. The latest 14-day Relative Strength Index at 48.30 is broadly neutral, hinting at a consolidation phase rather than a decisive recovery while the contract remains capped by these overhead averages.
On the topside, initial resistance appears at the Bollinger middle band near $81.30, ahead of the 100-day SMA at $85.20, with the Bollinger upper band around $88.30 marking a stronger supply zone if a rebound extends. On the downside, the first meaningful support is aligned with the Bollinger lower band around $74.35, where buyers could attempt to stem deeper losses should the current bearish pressure persist.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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.
Nothing in this material constitutes investment advice, personal recommendation, investment research, an offer, or a solicitation to buy or sell any financial instrument. The content has been prepared without consideration of your individual investment objectives, financial situation, or needs, and should not be treated as such.
Past performance is not a reliable indicator of future performance and/or results. Forward-looking scenarios or forecasts are not a guarantee of future performance. Actual results may differ materially from those anticipated.
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