WTI edges higher above $89.00 as US carries out fresh strikes in Iran
- WTI price gains ground to near $89.35 in Thursday’s early Asian session.
- US military carried out new strikes on an Iranian military site. hcarried out
- US crude inventories continued to sink last week, said API.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $89.35 during the early Asian trading hours on Thursday. WTI price recovers some lost ground amid renewed tensions between the US and Iran. Traders brace for the release of the Energy Information Administration (EIA) report, which will be published later on Thursday.
Fresh US strikes in Iran renewed concerns over disruptions to commercial shipping through the Strait of Hormuz. The US military on Wednesday carried out new strikes in Iran targeting a military site that posed a threat to US forces and commercial traffic in the Strait of Hormuz, per Reuters. The source also said that the US military has also intercepted and shot down multiple Iranian drones that posed a similar threat.
Earlier Wednesday, US President Donald Trump said that he won’t be rushed into a deal, warning that Iran’s efforts to outlast him won’t work because he doesn’t “care about the midterms.” Rising tensions between the US and Iran could undermine the WTI price in the near term.
US crude oil inventories dropped last week. According to the Energy Information Administration (EIA) report, crude oil stockpiles in the US for the week ending May 22 declined by 2.8 million barrels, compared to a fall of 9.1 million barrels in the previous week.
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.
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