WTI extends upside above $72.00 as Israel-Iran conflict deepens
- WTI price rises to near $72.15 in Monday’s early Asian session.
- Concerned over wider conflict between Iran and Israel that could disrupt supplies support the WTI price.
- Trump’s tariff uncertainty might cap the WTI’s upside.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $72.15 during the Asian trading hours on Monday. The WTI price extends the rally to the highest since February after Israel attacked two natural gas facilities in Iran, raising fears that a wider war in the region could disrupt supplies in the region.
The WTI price has risen since Friday following an Israeli attack on Iran. A senior commander said on Saturday that Iran is considering shutting down the Strait of Hormuz. The strait transports around one-fifth of the world's oil to global markets, according to Goldman Sachs. A closure of the strait could boost the oil prices.
On the other hand, the tariff uncertainty triggered by US President Donald Trump might undermine the WTI price. Trump said that he intends to send letters to dozens of US trading partners in the next one to two weeks, setting unilateral tariffs ahead of the July 9 deadline that came with his 90-day pause.
Oil traders will keep an eye on China’s Retail Sales and Industrial Production for May, which will be released later on Monday. If the reports show a weaker-than-expected outcome, this could weigh on the black gold as China is the world's second-largest consumer of oil and gas.
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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