WTI drifts higher above $72.00 despite trade war concerns
- WTI price extends the recovery to around $72.10 in Tuesday’s early Asian session.
- Tariff uncertainty might cap the WTI’s upside in the near term.
- Iran called for OPEC to unite against potential US oil sanctions.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $72.15 during the early Asian session on Tuesday. The WTI price edges higher despite ongoing tariff concerns.
WTI price recovers some ground, even though oil traders remain worried that US President Donald Trump might start a trade war. On Monday, US President Donald Trump expanded his steel and aluminum tariffs to cover all imports, effectively canceling deals with the European Union, the United Kingdom, Japan and others.
"It's tariff uncertainty which is the name of the game. This affects risk appetite in general and has spillover effects into oil," said Harry Tchilinguiran at Onyx Capital.
The market continues to digest the news and assess the potential impacts of tariffs on global trade. Any signs of rising trade war tensions could drag the WTI price lower as tariffs could dampen global economic growth and energy demand.
On the other hand, the escalating geopolitical tensions in the Middle East and the Russia-Ukraine conflict could underpin the black gold. Iran’s President Masoud Pezeshkian urged OPEC members to unite against possible US sanctions on the major oil producer after Trump said he would seek to drive Tehran’s oil exports to zero.
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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