Iran’s Mojtaba Khamenei says Strait of Hormuz must remain closed as tool to pressure enemy

Lallalit Srijandorn FXStreet

Iran’s new supreme leader, Mojtaba Khamenei, said in his first public statement since being appointed that the closure of the Strait of Hormuz maritime passage should be continued as a “tool to pressure the enemy,” CNBC reported on Thursday.

Khamenei added that all US military bases in the region should be immediately closed or will be attacked. He stated that attacks against US bases in the region would continue, even though Iran believes in goodwill with its neighbors.

US Treasury Secretary Scott Bessent said that the US Navy will escort oil tankers through the Strait of Hormuz when ‘militarily possible.’

Meanwhile, top Trump officials recognized they did not plan for the chance of Iran closing the Strait in response to strikes. The Pentagon and National Security Council (NSC) stated that they significantly underestimated Iran’s readiness to close the Strait of Hormuz in response to US military strikes while planning the ongoing operation, according to CNN.

CBS News reported earlier on Friday that the US fired at an Iranian vessel that approached the USS Abraham Lincoln aircraft carrier too closely.

Market reaction

Crude oil prices attract some buyers following this headline. At the time of writing, the West Texas Intermediate (WTI) is up 9.68% on the day at $95.88.

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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