Breaking: WTI rises to near $105.00 as Trump maintains Iran naval blockade
- WTI price jumps to near $104.90 in Thursday’s early Asian session.
- Trump said he will maintain the Iranian naval blockade until a new agreement on Tehran's nuclear program is reached.
- The UAE will leave OPEC on May 1.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $104.90 during the early Asian trading hours on Thursday. The WTI price climbs amid an escalating naval blockade of Iranian ports and the United Arab Emirates' (UAE) shock withdrawal from the Organization of the Petroleum Exporting Countries (OPEC).
US President Donald Trump said on Wednesday that he will continue the naval blockade of Iran until he secures a deal with Tehran to address the country’s nuclear program, per Bloomberg. Trump rejected proposals to reopen the vital waterway, declaring the economic strangulation more effective than military bombardment.
Iran warned on Wednesday of "unprecedented military action" against continued US blockading of Iran-linked vessels. Trump said Iran cannot have a nuclear weapon, while Tehran stated its nuclear ambitions are peaceful. Ongoing tensions between the US and Iran continue to boost the WTI price.
The UAE will exit OPEC on May 1, dealing a blow to the oil-producing group as an unprecedented energy crisis, caused by the Iran war, exposes discord among Gulf nations. The announcement on Tuesday came after the UAE was the target of missile and drone attacks for weeks by fellow OPEC member Iran.
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
Lallalit Srijandorn
FXStreet
Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.
