WTI rises to near $98.50 as UAE seeks UN-backed action to reopen Hormuz
- WTI rebounds as UAE pushes military action to reopen Strait of Hormuz.
- Emirati officials seek UN Security Council approval for a multinational military mission to restore Strait navigation.
- Trump said that the US would leave the Iran war soon, with withdrawal possible within two to three weeks.
West Texas Intermediate (WTI) oil price edges lower after registering over 4% gains in the previous day, trading around $98.60 per barrel during the Asian hours on Wednesday. Crude oil prices rebound as the United Arab Emirates (UAE) pushes for military action to reopen the Strait of Hormuz, signaling a major strategic shift and elevating risks of broader regional escalation, while Iran warns of further retaliation.
According to a Wall Street Journal report, Emirati officials are lobbying for a United Nations Security Council (UNSC) resolution to authorize a multinational mission to restore navigation in the strait, potentially involving the use of force. The UAE is also urging the United States (US) and allied nations across Europe and Asia to form a coalition to clear mines, escort commercial vessels, and, if required, secure strategic positions along the waterway.
Oil prices faced downside pressure amid growing expectations of Middle East de-escalation following remarks from US President Donald Trump. Trump indicated that US operations could conclude before the Strait of Hormuz fully reopens, aiming to avoid prolonging the conflict.
Iran’s president also signaled openness to ending hostilities under specific guarantees. However, uncertainty persists due to Iran’s historically firm stance and continued US military presence, which could heighten the risk of renewed escalation.
Meanwhile, a Reuters survey showed the OPEC (Organization of the Petroleum Exporting Countries) oil output dropped sharply in March to its lowest level since June 2020, during the peak of the COVID-19 pandemic, largely due to supply disruptions linked to the Strait of Hormuz. Production fell by 7.3 million barrels per day (bpd) month-over-month to 21.57 million barrels per day.
The American Petroleum Institute (API) reported that Weekly Crude Oil Stock surged by 10.263 million barrels in the week ending March 27, marking the largest build in weeks. This increase followed a prior rise of 2.3 million barrels and ran counter to expectations for a 1.3 million-barrel draw.
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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