WTI falls to near $61.50 on possible US-Iran de-escalation
|- WTI price slumps to near $61.60 in Tuesday’s early European session, down 0.58% on the day.
- US and Iran may hold diplomatic talks later on Friday as Trump weighs a possible military strike on the Islamic Republic.
- Trump said the US would reduce reciprocal tariff on India from 25% to 18%.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $61.60 during the early European trading hours on Tuesday. The WTI price tumbles after reports that the United States (US) and Iran would begin talks on Friday.
Reuters reported on Monday that Iran and the US will resume nuclear talks on Friday in Turkey. US Special Envoy Steve Witkoff and Iranian Foreign Minister Abbas Araqchi will meet in an attempt to revive diplomacy over a long-running dispute about Iran’s nuclear programme and alleviate worries of a new regional war.
Traders will closely monitor the developments surrounding US-Iran negotiations. Easing tensions between the US and Iran, OPEC’s fourth-largest crude oil producer, could weigh on the WTI price in the near term.
"The volatile price actions of oil seen in the last four weeks have been driven by the geopolitical risk premium factor that is linked to the current U.S. administration's expansionary foreign policy, especially the 'on-off' threats towards Iran," said OANDA senior market analyst Kelvin Wong.
US President Donald Trump said on Monday that he will slash tariffs on India to 18% after Prime Minister Narendra Modi agreed to stop buying Russian oil. This headline could help limit the WTI’s losses as India is one of the world’s largest crude oil importers. Lower tariffs could underpin oil demand expectations.
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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