WTI treads water above $64.00 due to ongoing geopolitical tensions
- WTI prices are supported by persistent geopolitical tensions between the US and Iran.
- Crude upside may be capped as diplomatic progress emerges, despite US warnings to avoid Iranian waters near Hormuz.
- Venezuelan Oil exports surge to 800,000 bpd in January from 498,000 bpd in December.
West Texas Intermediate (WTI) Oil price continues to trade higher for a third consecutive session, trading near $64.20 per barrel during early European trading on Tuesday. Crude Oil prices are supported by ongoing geopolitical tensions between the US and Iran, while traders await the American Petroleum Institute (API) weekly inventory report due later in the day.
That said, upside momentum of the crude prices could be capped by signs of diplomatic progress. On Monday, the US warned American-flagged vessels to avoid Iranian waters while passing through the Strait of Hormuz, even as both countries signaled that talks would continue after what were described as positive discussions in Oman last Friday. Still, uncertainty persists, with Iran maintaining its stance on uranium enrichment—a key point of contention for Washington.
WTI price may also come under pressure from rising global supply. Venezuelan crude exports increased sharply, reaching 800,000 barrels per day (bpd) in January, up from 498,000 bpd in December, according to Reuters, potentially adding to supply-side headwinds.
Meanwhile, markets are closely watching developments around India’s imports of Russian oil. Recent US–India trade discussions have reportedly been linked to a freeze on Russian crude purchases. As one of the largest buyers of Russian oil, any disruption to India’s imports could provide notable support to global 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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