WTI jumps to near $74.50 on Middle East conflict, Strait of Hormuz closure threatens oil supply
- WTI price climbs to $74.50 in Wednesday’s early Asian session, up 3.20% on the day.
- A prolonged closure of the Strait of Hormuz could raise concerns about supply disruptions, potentially boosting the WTI price.
- The API reported a 5.6 million barrel build last week.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $74.50 during the early Asian trading hours on Wednesday. The WTI jumps to its highest since June 2025 as a widening conflict between the US, Israel, and Iran severely disrupts global energy supplies.
Israeli and US forces pounded targets across Iran on Tuesday, prompting Iranian retaliatory strikes around the Gulf as the conflict spread to Lebanon. A commander in Iran’s Revolutionary Guard Corps (IRGC) said that the Strait of Hormuz is closed and Iran will fire on any ship trying to pass.
US President Donald Trump said late Tuesday that the US navy will offer insurance to ships in the Gulf after Iran largely succeeded in shutting down the Strait of Hormuz. Trump added that the US military will accompany ships through the Strait of Hormuz if necessary. The risk of an oil supply disruption in the Middle East could boost the WTI price in the near term.
According to the American Petroleum Institute (API) weekly report, crude oil stockpiles in the US for the week ending February 27 climbed by 5.6 million barrels, compared to a rise of 11.4 million barrels in the previous week. The market consensus was for 2.19 million barrels.
Traders brace for the release of the Energy Information Administration (EIA) report, which will be released later on Wednesday. A larger-than-expected crude oil inventory draw indicates stronger demand and could lift the WTI price, while a bigger build than estimated signals weaker demand or excess supply, which might weigh on the WTI price.
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
