WTI steadies near $86.00 as Iran sanctions threat offsets US inventory build
- WTI price flatlines near $86.00 in Friday’s early European session.
- Trump vowed the toughest Iran sanctions.
- US crude inventories rose by 4.4 million barrels in the week ending August 14, EIA showed.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $86.00 during the early Asian trading hours on Tuesday. WTI steadies near one-month highs as traders continue to digest the Middle East developments.
US President Donald Trump on Wednesday threatened what he called the “most crushing economic operation” against Iran, warning that any country whose “financial institutions, businesses, airports, or government entities” aid Tehran will face penalties.
Iranian Foreign Minister Abbas Araghchi condemned the US threat of new economic sanctions, describing the proposed measures as “illegal and inhumane”.
US Central Command (CENTCOM) said that its forces have redirected 67 merchant ships, disabled three, and boarded two others travelling to or from Iranian ports while enforcing a revived naval blockade. An intense escalation in the US-Iran conflict could raise oil supply fears, boosting the WTI price in the near term.
US crude oil inventories rose by more than expected last week. This, in turn, might cap the upside for the black gold. According to the US Energy Information Administration (EIA), crude oil stockpiles in the US for the week ending August 14 climbed by 4.405 million barrels, compared to a surge of 17.422 million barrels in the previous week. The market consensus was for a decline of 600,000 barrels.
Oil supply risks persist as TD Securities flags critically tight crude flows
According to TD Securities, the backdrop for crude remains fraught, with “negotiations on hold for weeks and a shift toward economic pressure” reinforcing their view that “crude flows in the market will remain critically tight.” The bank also cautions that “Iranian aggression in the Oman lane will likely remain the norm,” underscoring ongoing geopolitical risks to supply and adding to the bullish tone around Oil fundamentals.
Technical Analysis: WTI keeps a positive tone in the near term
In the daily chart, the near-term bias of WTI US Oil is constructive, as price crosses above the 100-day simple moving average (SMA) and the Bollinger Bands middle line, suggesting a supported uptrend after the recent pullback. The Relative Strength Index (14) at 59.00 stays in positive territory, hinting at steady bullish momentum without yet entering overbought conditions.
On the topside, immediate resistance emerges near the latest Upper Bollinger Band at $88.18, where buyers could hesitate after the recent advance. On the downside, initial support is seen at the 100-day SMA at $85.85, ahead of a deeper structural cushion at the Bollinger middle band near $81.20, while the lower band around $74.25 marks a broader downside floor if selling intensifies.
(The technical analysis of this story was written with the help of an AI tool. Know more.)
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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