WTI holds steady as traders weigh US-Iran tensions and supply risks
- WTI trades flat as markets weigh hopes of reduced US-Iran tensions against persistent supply risks.
- Fresh IRGC warnings and a tanker attack keep risk around the Strait of Hormuz elevated.
- Saudi supply conditions improve, while Hurricane Isaias cuts US Gulf production.
West Texas Intermediate (WTI) Oil trades little changed on Friday as traders weigh easing fears of an immediate US-Iran military escalation against persistent supply risks in the Strait of Hormuz. At the time of writing, WTI trades around $90.65 per barrel, up 0.10% on the day.
Oil prices came under modest pressure on Thursday after US President Donald Trump said on Thursday that Washington would not attack Iran before the November 3 midterm elections.
Oil prices pared some of their gains on Thursday after US President Donald Trump said Washington would not attack Iran before the November midterm elections. In a Truth Social post, Trump said, “We are having productive conversations with Iran.” He added, “We won’t be attacking Iran at any time before the midterms,” while reiterating that Tehran would not be allowed to acquire a nuclear weapon.
US Vice President JD Vance also told Reuters earlier this week that Iran must make a “meaningful” reduction in its nuclear enrichment capacity to end the war. A senior Iranian official responded that Tehran would not give up its right to enrich uranium and said Washington’s proposals remain at odds with Iran’s demands.
Iran has also maintained that it will not reopen the Strait of Hormuz until its conditions are met. On Friday, Iran’s Islamic Revolutionary Guard Corps (IRGC) warned that vessels using what it considers unauthorised routes could be pursued beyond the Strait and across the wider region.
The latest warning followed reports from Iran’s Tasnim News that a large liquefied petroleum gas tanker had been hit and caught fire. The IRGC blamed the United States for the escalation in regional maritime tensions.
Elsewhere, the supply picture remains mixed. Regional crude exports are improving, led by Saudi Arabia after the restart of its East-West pipeline, which allows crude to reach the Red Sea without passing through the Strait of Hormuz. However, renewed fighting between Saudi Arabia and the Houthis keeps risks to regional energy infrastructure elevated. Meanwhile, Hurricane Isaias has forced producers to shut down around 1.3 million barrels per day, or 62.9% of Gulf of Mexico Oil production.
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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