WTI slips below $91.00 despite rising US-Iran friction
- WTI may rebound as Iranian President Pezeshkian rejected US threats and threatened to restrict Strait of Hormuz navigation.
- The US administration is working with domestic refiners to voluntarily reduce diesel exports.
- Saudi Arabia prepares to restart its East-West pipeline, while Ukraine discusses an energy ceasefire.
West Texas Intermediate (WTI) oil price depreciates after registering modest gains in the previous day, trading around $90.80 per barrel during Asian hours on Thursday. Crude oil prices may rebound as ongoing uncertainty surrounds the progress of the United States (US)-Iran diplomatic talks.
Speaking at the UN General Assembly, Iranian President Masoud Pezeshkian declared that Tehran would not yield to threats and reaffirmed the nation's right to pursue nuclear technology for economic development. He further emphasized that Iran would restrict freedom of navigation through the strategic Strait of Hormuz for as long as US sanctions and blockades remain active.
In response to domestic energy concerns, US Energy Secretary Chris Wright announced that the Trump administration is collaborating with domestic refiners to voluntarily reduce US diesel exports, offering an alternative to a formal overseas shipment ban. At the same time, geopolitical dynamics in the energy sector continue to shift as Saudi Arabia moves to resume oil exports via its critical East-West pipeline, and Ukrainian President Volodymyr Zelenskyy revealed recent discussions with President Donald Trump regarding a potential energy ceasefire.
Crude sentiment stays cautious as TD flags headline-driven positioning risks
According to TD Securities, market participants are treating the latest “deal headlines” with caution, as the bank’s strategists “remain skeptical of any deal headlines until there is actually something concrete.” They warn that as speculative positioning in crude “becomes more elevated, the more prone the market is to the daily headline flow,” reinforcing their view that current price resilience is increasingly vulnerable to shifts in sentiment rather than fundamentals alone.
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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