WTI declines as Israel-Lebanon ceasefire eases tensions in the Middle East
- WTI falls nearly 3% as the Israel-Lebanon ceasefire boosts hopes for progress in US-Iran talks.
- The IMF says the war in Iran has cut global Oil production by around 14 million barrels per day.
- Fitch cuts its 2026 global growth forecast due to the Oil crisis.
West Texas Intermediate (WTI) Crude Oil slips nearly 3% on Thursday as market sentiment improves following a ceasefire agreement between Israel and Lebanon. At the time of writing, WTI trades around $91 per barrel, snapping a three-day winning streak.
The ceasefire, announced by the United States, removes a key sticking point in the US-Iran negotiations and raises hopes that talks between the two sides could regain momentum.
However, the downside in Oil prices may remain limited unless both sides make meaningful progress toward a deal that would reopen the Strait of Hormuz. This critical chokepoint handles 20% of global Oil shipments.
The Iran war has created a significant supply shock. According to the International Monetary Fund (IMF), the war has cut global Oil production by around 14 million barrels per day.
The Fund also warned that global Oil inventories could fall to a five-year low of 7.5 billion barrels in July, down from 8 billion barrels before the war began.
The IMF noted that Oil prices remain about 3% above the levels assumed in its April forecast for 3.1% global growth and said future prices will depend on reopening the Strait of Hormuz.
Meanwhile, Fitch Ratings said in its latest Global Economic Outlook that it has cut its 2026 global growth forecast by 0.2 percentage points to 2.4% due to the Oil crisis.
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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