WTI Oil holds above $103.00, near five-month highs amid new attacks in the Strait of Hormuz
- WTI Oil remains above $103.00 after hitting fresh five-month highs at $104.00.
- Ongoing attacks in the Strait of Hormuz have increased concerns about supply disruptions.
- Regional powers keep pushing for a peace deal, but the US keeps the military option on the table.
Oil appreciates for the third consecutive day on Friday as reports of new attacks on vessels attempting to cross the Strait of Hormuz boost concerns about supply disruptions. The price of the US benchmark West Texas Intermediate (WTI) barrel remains above $103.00 after having reached five-month highs just above 104.00 earlier in the day, and is on track to close the month with a 15% appreciation.
Attacks on vessels in the Strait of Hormuz keep pushing Crude prices higher. On Friday, the UK Maritime Trade Organisation (UKMTO) said that an Oil tanker was disabled after the explosion of two limpet mines in the first successful attack with this kind of explosive since the conflict started in February.
Beyond that, the Iranian Islamic Revolutionary Guard Corps (IRGC) authorities affirmed that four vessels struck tankers in the Hormuz waterway, while the Tehran-backed Houthi militias claimed attacks on Saudi Arabia airports and Oil infrastructure, increasing concerns about global supply.
Qatari mediators return to Tehran to broker a peace deal
Meanwhile, regional mediators maintain their efforts to push towards an elusive peace deal. Reuters reported earlier on Friday that a Qatari delegation returned to Tehran in another attempt to bring the US and Iran back to the negotiating table after US Vice President JD Vance allegedly contacted Iranian officials proposing a new diplomatic process.
Markets, however, remain sceptical about any immediate progress towards a negotiated end of the conflict as the parties' positions remain far apart on key issues like uranium enrichment. Against this backdrop, a report by the Wall Street Journal affirmed on Thursday that a top US commander has briefed US President Donald Trump on the military options in Iran, which suggests that hostilities might resume after next week’s mid-term elections.
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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