WTI rises above $100.00 amid Israeli election deadlock, Saudi infrastructure attack
- WTI advances as Israel's election yielded a tight deadlock between Netanyahu and Eisenkot.
- Regional diplomacy picked up with Saudi, Pakistani, Turkish, and Iranian leadership meetings.
- Houthi missile strikes on Saudi Arabia's largest oil refinery further heightened supply risk concerns.
West Texas Intermediate (WTI) oil price rises after two days of losses, trading around $100.30 per barrel during Asian hours on Wednesday. Crude oil prices advanced as global markets closely monitored election results in Israel that could alter the trajectory of the ongoing Middle East conflict.
Exit polls indicated a tight race, showing Prime Minister Benjamin Netanyahu tied with opposition leader Gadi Eisenkot, with neither bloc securing a majority as vote counting continues. Despite the deadlock, the results point to weakening support for Netanyahu, a dominant figure in Israeli politics for decades who has guided the country through nearly three years of continuous conflict.
Meanwhile, markets assessed renewed diplomatic efforts across the region following Monday's meetings between Iranian leaders and officials from Saudi Arabia, Pakistan, and Turkey. Adding to the diplomatic momentum, Iran’s Supreme Leader Mojtaba Khamenei called for an end to the current state of "neither war nor peace."
However, the broader outlook for peace remains highly uncertain due to escalating violence from Yemen's Iran-aligned Houthis. The group renewed attacks on key oil producer Saudi Arabia, announcing on Tuesday that they had struck the kingdom's largest oil refinery, Ras Tanura, using a ballistic missile.
Geopolitical brinkmanship around Iran keeps Brent risk premium elevated
According to analysts at Commerzbank, the geopolitical backdrop for Brent remains highly charged, with US President Donald Trump having recently threatened Iran, saying he would soon decide either to make a deal or to “finish it off.” The bank warns that “new US attacks on Iran could take place following the US mid-term elections next week,” adding that the outcome of today’s parliamentary elections in Israel could also prove pivotal for the trajectory of the conflict. Should Israeli Prime Minister Benjamin Netanyahu be returned to office, Commerzbank cautions he “might attempt to achieve regime change in Iran,” a scenario that would further entrench the risk premium already embedded in oil prices.
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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