WTI rises above $95.00 as Iran's attacks on facilities fuel supply fears
- WTI price jumps to near $95.00 in Wednesday’s early Asian session.
- Iran attacks production facilities, supporting the WTI price.
- US crude oil stockpiles rose by 6.6 million barrels, exceeding the forecast.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $95.00 during the early Asian trading hours on Wednesday. The WTI price climbs amid intensifying Middle East conflict and severe supply disruptions. Traders brace for the release of the US Energy Information Administration (EIA) report, which will be published later on Wednesday.
Iran carried out attacks on production facilities in the United Arab Emirates (UAE) and Iraq on Tuesday. The Guardian said this is the first time since the start of the war with the US and Israel that Iran has successfully targeted oil and gas production facilities rather than just refineries, terminals and storage.
Additionally, the Israeli military said Iran's top security official, Ali Larijani, and the head of the paramilitary Basij force, Gholamreza Soleimani, have been killed in Israeli air strikes. This raises fears of further retaliation and deeper supply cuts, which could boost the WTI price in the near term.
On the other hand, a significant surge in U.S. crude oil inventories might cap the upside for the WTI. According to the American Petroleum Institute (API) weekly report, crude oil stockpiles in the US for the week ending March 13 climbed by 6.6 million barrels, compared to a fall of 1.7 million barrels in the previous week. The market consensus was for a decline of 600,000 barrels.
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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