WTI falls to near $93.50 after Israel, Iran signal an end to hostilities
- WTI declines after Israel and Iran separately signaled a temporary halt in hostilities.
- Oil prices previously surged after renewed tensions escalated between the US and Iran.
- The US military said it launched retaliatory strikes on Iranian sites linked to attacks on US forces.
West Texas Intermediate (WTI) oil price loses ground after registering modest gains in the previous day, trading around $93.70 per barrel during the Asian hours on Friday. Crude oil prices fell after separate reports from Israel and Iran indicated that hostilities have, at least for now, come to a halt.
Oil prices had earlier climbed after renewed tensions erupted between the United States (US) and Iran. The US military stated that it carried out retaliatory strikes on Iran on Thursday, targeting sites allegedly responsible for attacks on US forces.
The US military launched strikes on the Iranian port city of Bandar Abbas and Qeshm Island in the Strait of Hormuz. A senior US official told Fox News that the attacks do not signal a resumption of the war and should not be interpreted as the end of any existing ceasefire agreement.
US Central Command confirmed that Iranian forces launched missiles, drones, and small-boat assaults against USS Truxtun, USS Rafael Peralta, and USS Mason while the three guided-missile destroyers were transiting the Strait of Hormuz. CENTCOM described the Iranian operation as unprovoked and stated that US forces responded under the right to self-defense, according to the official statement.
Iran’s military accused the US of breaching the ceasefire between the two countries, claiming that American forces targeted two ships in the Strait of Hormuz and struck civilian areas, according to Reuters.
Meanwhile, the Trump administration is awaiting Iran’s response to a proposal intended to reopen the Strait of Hormuz and bring an end to the nearly 10-week conflict, while tensions continue to remain high across both the Persian Gulf and Lebanon. Reports indicate that Tehran is expected to communicate its response through Pakistan within the next two days.
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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