WTI price edges higher to near $79.00 as US-Iran war escalation threatens oil flows
- WTI price holds positive ground near $79.00 in Friday’s early European session.
- The US carried out another wave of attacks on Iran, hitting targets including defense sites.
- Global energy security at risk if Strait of Hormuz does not open in weeks, IEA chief said.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $79.00 during the early European trading hours on Friday. The WTI heads for its biggest weekly advance since April as rising tensions in the Middle East raise fears of oil supply disruption.
The BBC reported on Thursday that the US Central Command (CENTCOM) said that it launched a new wave of strikes against Iran. The US military said that the attacks were intended to "further degrade Iranian military capabilities" before saying it had boarded a vessel as part of its blockade of the Strait of Hormuz.
The Iranian Islamic Revolutionary Guards Corps (IRGC) said that no oil or gas will be exported through the Strait of Hormuz as long as US attacks continue.
Elsewhere, Fars News reported another attack in the Middle East, saying that very loud explosions were heard in Kuwait, and the sound was also heard in Basra. Qatar’s Defence Ministry also said on Friday that the country intercepted a missile attack.
The International Energy Agency (IEA) Executive Director Fatih Birol said on Thursday that if the US and Iran do not increase oil flowing through the Strait of Hormuz soon, the world should worry about energy security.
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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