WTI maintains position above $59.00 as supply risks grow
- WTI price climbs as supply risks increase amid escalating unrest in Iran.
- Trump warned Tehran against force on protesters, while Iran cautioned against any US or Israeli intervention.
- Oil gains may be limited by expected Venezuelan export resumption and forecasts of market oversupply.
West Texas Intermediate (WTI) Oil price extends its gains for the third successive session, trading around $59.10 per barrel during the Asian hours on Monday. Crude Oil prices rise as supply risks grow amid escalating protests in Iran. The country exports nearly 2 million barrels per day (bpd) and is OPEC’s fourth-largest producer, making any escalation a material threat to global supply.
The unrest has moved into its third week, reportedly claiming hundreds of lives, as authorities signal a tougher response. US President Donald Trump warned Tehran against using force on protesters and hinted at possible action if the crackdown escalates, while Iranian officials cautioned against any US or Israeli involvement.
Oil price gains may be capped by expectations that Venezuelan exports could resume following the ouster of President Nicolas Maduro and forecasts of market oversupply this year. Trump said last week that Caracas is set to hand over up to 50 million barrels of sanctioned oil to the United States, per Reuters.
Uncertainty over Venezuela’s crude shipments remained as shifting US policy and sanctions clouded the outlook for its Oil flows. Trump also warned Cuba that Venezuelan oil and financial support would be cut unless Cuban leaders reached an agreement with Washington.
Meanwhile, traders are also monitoring potential supply disruptions from Russia amid ongoing Ukrainian attacks on Russian energy facilities and the prospect of tougher US sanctions on Russian energy.
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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