Iran tells Houthis to close Red Sea oil route if US hits power network — Reuters

Lallalit Srijandorn FXStreet

Iran has asked Yemen’s Houthi militia to stand ready to close the Red Sea oil route if the United States (US) strikes Iranian power infrastructure, posing a potent new threat to global energy supplies, Reuters reported on Thursday.

According to a source close to the Houthis, the group had finished preparing to attack shipping by deploying missiles and drones near the Bab El-Mandeb Strait, the gateway ‌to the Red ‌Sea in Yemen's highlands with views of Hodeidah and the Gulf of Aden. The source said that representatives of Iran’s Islamic Revolutionary Guard Corps (IRGC), who are already in Yemen, will control the decision on when to close the Bab El-Mandeb Strait.

On Friday, the US has intensified its attacks on Iran for the sixth day in a row. Iranian state media reported that the US carried out fresh wave of strikes on Iran early on Thursday, hitting areas around Tehran for the first time in the current round of fighting, as well as striking other provinces.

The US Central Command (CENTCOM) also stated that it fired on a tanker sailing towards Kharg Island, Iran’s biggest oil export terminal. The US military said a Hellfire missile was fired at the ship after it “ignored multiple warnings.”

Earlier Thursday, the Tasnim news agency reported another explosion in Bandar Abbas, Qeshm, and Ahvaz. The source said the attacks targeted the bridge connecting Bandar Abbas to Shiraz, known as the Bandar Abbas-Khorstan-Lar bridge. Power outages are currently affecting areas in Kahorstan.

Meanwhile, Fars News reported another attack in the Middle East, saying that there were very loud explosions heard in Kuwait, and the sound was also heard in Basra. On Friday, Qatar’s Defence Ministry also said the country intercepts missile attack.

WTI Oil FAQs

What is WTI Oil?

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.

What factors drive the price of WTI Oil?

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.

How does inventory data impact the price of WTI Oil

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.

How does OPEC influence the price of WTI Oil?

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.

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