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WTI rises to near $92.50 despite Middle East diplomacy, resuming flows

  • US-Iran peace efforts and upcoming UN meetings ease supply fears.
  • A proposed $5 billion fund targets war-damaged regional rebuilding.
  • Saudi Arabia maintains strong crude movement through the Strait of Hormuz.

West Texas Intermediate (WTI) oil price halts its four-day losing streak, trading around $92.30 per barrel during the Asian hours on Tuesday. However, crude oil prices may face further challenges amid easing supply concerns in the Middle East and growing diplomatic efforts to end the US-Iran war.

US President Donald Trump is scheduled to address the UN General Assembly in New York later in the day and could meet with Iranian President Masoud Pezeshkian on the sidelines. Trump is also expected to hold discussions with other Gulf nations and Chinese President Xi Jinping this week. Meanwhile, the Trump administration has proposed a $5 billion fund to help rebuild infrastructure across the Middle East damaged by the war.

Moreover, Saudi Arabia moved crude through the Strait of Hormuz at 2.9 million barrels per day over the past six days. Satellite images also showed supertankers with a combined capacity of 14 million barrels at Saudi Arabia’s Gulf export terminals over the weekend, marking the highest tanker count observed since at least June.

However, Tensions in the Middle East persisted as Yemen's Iran-backed Houthis reported launching attacks against Riyadh and a Saudi Aramco facility in Yanbu, alongside intensified maneuvers to block Saudi-backed forces from accessing the Red Sea coast.

Al Jazeera news agency reported that US Treasury Secretary Scott Bessent said that Iranian airlines could effectively be shut out of international travel from September 23, as the United States threatens foreign companies with secondary sanctions if they continue servicing the country’s carriers.

According to TD Securities, positioning in the crude complex has shifted even as the recent rally drew in more speculative interest. The bank notes that “net speculative length has been increasing in recent weeks,” but highlights that “CTAs are now liquidating a portion of their recently acquired WTI and Brent crude oil length,” underscoring a more cautious stance among systematic traders despite the build-up in overall speculative exposure.

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.

Author

Akhtar Faruqui

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

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