WTI Oil drifts below $72.00 as Iran eases the grip on the Strait of Hormuz
- Oil prices dropped below $72.00 for the first time since the US-Iran war started.
- News from the Strait of Hormuz shows a significant increase in traffic through the corridor.
- Trump accused Oil firms of gouging consumers by keeping prices inflated.
Crude Oil prices keep trending lower, with the US benchmark West Texas Intermediate (WTI) barrel extending its decline below the $72.00 line on Wednesday, and reaching its lowest level since the UA and Israel attacked Iran in late February.
News reporting an increase in traffic through the Strait of Hormuz and the US decision to waive sanctions on Iran's crude during the 60-day ceasefire seem to have offset investors’ concerns about friction over nuclear inspections and doubts about the outcome of the peace deal.
Iran's nuclear inspections remain in the air
US President Donald Trump and Vice President JD Vance claimed that Iranian authorities agreed to allow entry to International Atomic Energy Agency (IAEA) inspectors to the country, although the Iranian Foreign Ministry Spokesperson, Esmaeil Baradei, said that there is no schedule for those inspections.
Meanwhile, the Strait of Hormuz Live Tracker, which monitors traffic through the Persian Gulf corridor, has reported 39 ships crossing the key waterway in the last 24 hours. This is still a fraction of the average 130 vessels passing through the corridor before the war started, but a sharp increase over the traffic seen before the US-Iran peace deal.
Beyond that, US President Donald Trump lashed out at oil firms in a post on Truth Social, accusing them of keeping fuel prices high at the pump despite the “lower prices they are paying for Oil.” He added that he has urged the Department of Justice (DOJ) to look for unfair commercial practices.
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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