WTI surges as US strikes Iranian tankers
- WTI climbs after US strikes near Kharg Island and Iranian retaliatory threats disrupt key shipping lanes.
- Houthi militants target southern Saudi Arabian energy infrastructure, including the major Jazan refinery, adding to supply fears.
- Stronger Chinese demand forces global refiners to seek alternative crude supplies from Africa, Canada, and Latin America.
West Texas Intermediate (WTI) oil price extends its gains for the third successive day, trading around $92.30 during the Asian hours on Wednesday. Crude oil prices rise as the US struck several Iranian tankers near Kharg Island, a major crude export hub. The attacks heightened geopolitical tensions and raised concerns about further disruptions to global oil supplies. A
US official said the strikes came in response to an attempted missile attack on a US warship. Tehran retaliated by launching ballistic missiles toward Jordan and warning vessels in the Persian Gulf, urging tanker crews near Kuwaiti and Bahraini ports to “immediately abandon their vessels.”
Iran-backed Houthi militants also attacked energy infrastructure in southern Saudi Arabia, including the 400,000-barrel-a-day Jazan refinery. Meanwhile, stronger Chinese oil demand is pushing up prices for African, Canadian and Latin American crude as disruptions in the Strait of Hormuz force refiners to look farther afield for alternative supplies.
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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