Trump: 'US will bomb and destroy' Iranian bridges or power plants
US President Donald Trump issued a fresh warning to Iran on Wednesday, threatening strikes on the country’s infrastructure if Tehran targets vessels in the Strait of Hormuz.
In a post on Truth Social, Trump wrote: “From this point forward, any time the Islamic Republic of Iran shoots at a ship in the Strait of Hormuz, whether it be by missile, rocket, drone, or any other device or weapon, the United States will bomb and destroy one bridge or power plant, including those located next to, or in, the capital city of Tehran.”
Market reaction
The US Dollar (USD) briefly strengthened following Trump's remarks, while West Texas Intermediate (WTI) crude Oil extended its gains. At the time of writing, the US Dollar Index (DXY), which tracks the Greenback's value against a basket of six major currencies, trades around 101.11, down 0.08% on the day. WTI trades near $86.50, up 2.75%, its highest level since June 11.
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.
Recommended Articles
