WTI hits two-week high Middle East tensions overshadow Russian diesel supplies
- WTI Oil rallies to a two-week high as supply risks remain elevated.
- Fresh Russian strikes on Ukrainian energy facilities cast doubt on the announced ceasefire.
- Middle East tensions and renewed tanker incidents in the Strait of Hormuz add to supply concerns.
West Texas Intermediate (WTI) Oil reverses course on Monday and climbs to a two-week high as doubts over a Russia-Ukraine energy ceasefire and supply concerns in the Middle East keep a geopolitical premium in energy markets. At the time of writing, WTI trades around $93.50, up 2.75% on the day, recovering from an intraday low of $89.02.
Oil prices opened the week on a bearish note after US President Donald Trump announced on Sunday that Russia and Ukraine had agreed to an immediate “energy ceasefire.” Trump also said on Friday that Russia would supply more than 300,000 tonnes of diesel, equivalent to around 2.25 million barrels, to US and global markets, with additional shipments to follow.
However, these announcements provided only brief relief. Ukrainian President Volodymyr Zelensky said Russia struck six energy facilities in Ukraine on Monday, casting doubt on the ceasefire. Asked about Trump’s announcement, the Kremlin said, “Contacts are ongoing, we will inform you in due course.”
Middle East developments add further support to crude prices after Houthi strikes on Riyadh’s international airport over the weekend. The attacks come as Saudi-backed Yemeni forces fight to regain ground near Bab el-Mandeb, a key chokepoint for Red Sea shipping.
Saudi Aramco CEO Amin Nasser said, “Globally, the squeeze on crude oil is serious,” adding, “Until Hormuz fully reopens and confidence returns, the pressure across the energy chain will only intensify.”
Iran’s Islamic Revolutionary Guard Corps (IRGC) said a third Oil supertanker struck a naval mine in the Strait of Hormuz in the past two days. IRGC said the tanker was hit after disabling its navigation system, ignoring naval warnings and attempting to leave the waterway.
Meanwhile, OPEC Secretary General Haitham Al Ghais said on Monday that the group now expects global Oil demand to grow by 400,000 barrels per day in 2026, down from its forecast of 1.4 million at the start of the year.
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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