WTI hovers around 95.50 as Australia, Japan release crude reserves
- WTI price remains calm as Australia and Japan have decided to release their fuel reserves.
- Australia’s Energy Minister Chris Bowen said the country will release up to 762 million litres of fuel from reserves.
- Japan plans to release about 80 million barrels from strategic reserves, roughly 45 days of supply, to ease disruptions.
West Texas Intermediate (WTI) oil price remains steady after experiencing volatility, hovering near $95.60 per barrel during the European hours on Friday. Oil prices struggled during the Asian hours after Chris Bowen, Australia’s Energy Minister, said the country would release up to 762 million litres of fuel from reserves after easing stockholding rules to address supply disruptions linked to the Iran conflict. The Australian government also plans to reduce minimum fuel stockholding requirements by up to 20% to help stabilize domestic supply.
Japan plans to release about 80 million barrels of oil from its strategic reserves—roughly 45 days of supply—to help ease global disruptions caused by the Middle East war. Japan relies on the Middle East for around 95% of its oil imports, with nearly 90% of shipments passing through the Strait of Hormuz, which Iran effectively controls. Japan’s Prime Minister Sanae Takaichi said in a broadcast statement that Japan will begin releasing its share from March 16 in coordination with the Group of Seven (G7) and the International Energy Agency (IEA).
However, Oil prices may continue to climb following the effective closure of the Strait of Hormuz amid escalating tensions involving the United States, Israel, and Iran. US crude prices have surged more than 40% since the conflict began. The International Energy Agency (IEA) warned that the US-Israeli war on Iran is “creating the largest supply disruption in the history of the global oil market.”
Iran’s new supreme leader, Mojtaba Khamenei, said in his first public remarks since taking office that keeping the Strait of Hormuz closed should remain a “tool to pressure the enemy.” He also warned that all US military bases in the region should be shut down immediately or risk potential attacks.
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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