WTI loses ground to near $65.50 amid concerns over mounting global supply, tariff fears
- WTI price drifts lower to around $65.65 in Tuesday’s early Asian session.
- Iraq resumes Kurdistan oil exports after over a two-year suspension.
- EU sanctions target Russian crude supply.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $65.65 during the early Asian trading hours on Tuesday. The WTI loses traction amid concerns of a mounting global oil supply glut. Traders await the release of the American Petroleum Institute (API) weekly crude oil stock report later on Tuesday for fresh impetus.
The Iraqi government has officially resumed crude oil exports from the Kurdistan Region after over two years' halt, in a move expected to ease tensions between Baghdad and Erbil and boost national export volumes. Kurdistan expects to supply Iraq's crude market with 230,000 barrels per day (bpd) of crude once exports resume. The outlook for larger crude exports from Iraq may boost global oil supplies and undermine the WTI price in the near term.
Additionally, the US tariff deadline might weigh on the WTI price. US tariffs on EU imports are expected to begin August 1, raising trade concerns that extend beyond oil. Commerce Secretary Howard Lutnick voiced optimism on reaching a deal with the bloc, but in the interim, tariff risk continues to cap crude’s upside.
On the other hand, the European Union (EU) measures on Russian crude supply might provide some support to the black gold. The EU last week approved the 18th package of sanctions against Russia over its war in Ukraine, which also targeted India's Nayara Energy, an exporter of oil products refined from Russian crude. This measure followed US President Donald Trump's threats last week to impose sanctions on buyers of Russian exports unless Russia agrees to a peace deal within 50 days.
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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