WTI drifts higher to near $73.00 on rising Israel-Iran tension
- WTI price edges higher to around $73.00 in Thursday’s early Asian session.
- Trump privately approved attack plans for Iran pending a final order.
- US Crude Oil Inventories fell the most in one year, according to the EIA.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $73.00 during the Asian trading hours on Thursday. The WTI price edges higher amid fears that the Israel-Iran crisis could spiral into a broader conflict involving the United States (US).
US President Trump said late Tuesday that he approved of attack plans for Iran but held them to see if Tehran would abandon its nuclear program, per the Wall Street Journal. Trump emphasized his insistence on Iran’s unconditional surrender, but Iranian Supreme Leader Ayatollah Ali Khamenei rejected the US demand. Analysts said direct US involvement would widen the conflict, putting energy infrastructure in the region at higher risk of attack. This, in turn, could boost the WTI price in the near term.
US Crude Inventories posted a massive draw last week. The US Energy Information Administration (EIA) weekly report showed crude oil stockpiles in the US for the week ending June 13 fell sharply by 11.473 million barrels, compared to a decline of 3.644 million barrels in the previous week. The market consensus estimated that stocks would decrease by 2.3 million barrels.
Nonetheless, the expectations of lower demand might cap the upside for the WTI. In its monthly oil report on Tuesday, the International Energy Agency (EIA) revised its world oil demand estimate downwards by 20,000 barrels per day from last month's forecast and increased the supply estimate by 200,000 bpd to 1.8 million bpd.
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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