WTI rises to near $89.50 as Middle East supply threats offset Persian Gulf recovery
- WTI advances as persistent Middle East supply risks and tanker attacks push oil prices higher.
- Houthi missile interceptions and Strait of Hormuz disruptions continue to threaten regional energy flows.
- Crude gains remain capped as Persian Gulf shipments recover.
West Texas Intermediate (WTI) oil price extends its gains for the second successive day, trading around $89.50 per barrel during the Asian hours on Wednesday. Crude oil climbed as persistent risks to Middle East energy flows overshadowed signs of rising supply from the region.
Iran has intensified attacks on tankers in the Strait of Hormuz in recent days, with the UK Maritime Trade Operations reporting nine incidents so far this month. Meanwhile, a Saudi-led coalition said it had intercepted and destroyed a ballistic missile launched by the Houthis toward Khamis Mushait in Saudi Arabia.
However, the upside in oil prices could be restrained as energy flows from the Persian Gulf show signs of recovery. Tankers are discreetly passing through the Strait of Hormuz despite heightened risks, and Saudi Arabia’s East-West oil pipeline has restored its crude pumping capacity to 5.8 million barrels per day.
Oil balances tighten as Middle East risks offset heavier flows
According to TD Securities, “crude oil is being weighed down by increasing flows,” but these additional barrels are “increasingly being met by both higher demand and Iranian/Houthi hostility.” The strategists highlight that rising supply is being absorbed by stronger consumption and ongoing disruptions linked to Iran and Houthi activity, leaving the broader balance for crude benchmarks tighter than headline flow data alone might suggest.
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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