WTI rebounds as Hormuz risks temper relief from rising Gulf exports
- WTI rebounds as persistent Middle East security risks keep Oil prices supported.
- Recovering exports and planned G7 reserve releases offer only limited supply relief.
- Traders await API and EIA inventory figures for fresh supply and demand signals.
West Texas Intermediate (WTI) rebounds on Tuesday as shipping risks in the Strait of Hormuz keep Oil prices supported despite improving Middle East exports, with US-Iran talks still deadlocked. At the time of writing, WTI trades around $89 after falling to an intraday low of $86.32, its lowest level since September 1.
According to the latest data from Kpler, Gulf crude exports, excluding Iran, averaged 18.3 million barrels per day in the final week of September, with the recovery driven mainly by Saudi Arabia. Additional supply relief came after G7 countries agreed on Friday to release 100 million barrels of diesel and crude oil from emergency reserves.
Saudi Energy Minister Prince Abdulaziz bin Salman said on Tuesday that flows through the East-West Pipeline reached 5.8 million barrels per day. The pipeline carries crude to the Red Sea export hub of Yanbu, providing an alternative route that bypasses the Strait of Hormuz.
According to TD Securities, “Chinese product export restrictions and growing refiner demand are increasingly absorbing the increase in supply, keeping prices elevated and risks tilted toward the upside in our view.”
Shipping risks remain elevated despite the recovery in exports. At least seven incidents involving tankers have been reported over the past week, according to shipping intelligence service Marisks. Meanwhile, fighting between Saudi Arabia and the Iran-backed Houthis leaves regional infrastructure exposed to fresh attacks.
Meanwhile, the US Energy Information Administration (EIA) raised its Oil price forecasts in its October Short-Term Energy Outlook, citing declining global inventories and tight diesel markets. The agency lifted its 2026 Brent forecast to $96.32 per barrel from $91.01 and its 2027 projection to $83.74 from $73.74. WTI forecasts rose to $88.21 for 2026 and $79.74 for 2027, from $84.65 and $69.74, respectively.
The EIA also lowered its global Oil demand forecasts to 102.4 million barrels per day for 2026 and 104.6 million for 2027, down from 102.6 million and 105 million, respectively.
Traders now turn to US inventory figures for fresh clues on supply and demand. The American Petroleum Institute (API) report is due later on Tuesday, followed by the EIA’s weekly inventory data on Wednesday.
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
