US President Donald Trump says he will not rule out more Iran strikes

Lallalit Srijandorn FXStreet

US President Donald Trump said on Sunday that he believes the war with Iran will be won “very soon,” adding that additional military strikes before the midterm elections are possible, Fox News reported.

“I think what's going to happen is we're going to win this war very soon, and as soon as we win it, the oil will go down, way down to what it was before the war,” said Trump. “And the key is, Iran will not have a nuclear weapon,” he added, saying nuclear deterrence was “key to the whole thing.”

Meanwhile, Iran’s Persian Gulf Strait Authority (PGSA) warned shipowners Sunday against using “unauthorized” routes through the Persian Gulf and Strait of Hormuz, threatening consequences for noncompliant shipping companies.

Market reaction

At the time of writing, the West Texas Intermediate (WTI) is up 0.72% on the day at $92.00.

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.

AUD/USD struggles below 0.7100, lowest since August 4 amid bullish USD

AUD/USD remains depressed below 0.7100 at the start of a new week, trading near its lowest level since August 4 amid a bullish US Dollar. US bond yields hold near multi-year highs amid inflation risks from higher oil prices and rising bets on a Fed rate hike in October. This, along with the US-Iran standoff, continues to underpin the safe-haven buck and weigh on the currency pair as traders now look to the RBA policy meeting on Tuesday.

USD/JPY climbs back to 157.75 after BoJ minutes amid firm USD

USD/JPY attracts some dip-buyers at the start of a new week, reversing part of Friday's slide driven by speculation that authorities will step in again to prop up the Japanese Yen. However, the BoJ's relative dovish-leaning tone caps the JPY. Meanwhile, the US Dollar regains traction as the US-Iran standoff supports crude oil prices, fueling inflation fears and reaffirming bets for an October Fed rate hike. This further support the pair.

Gold hangs near monthly low, around $4,250 as Fed hike bets and Iran risks underpin USD

Gold attracts fresh sellers at the start of a new week, sliding back closer to $4,250 and the lower boundary of the monthly range amid a bearish fundamental backdrop. Firming October Fed rate-hike bets, along with oil-driven inflation risks, keep US bond yields elevated near multi-year highs, helping the US Dollar regain positive traction and undermining the non-yielding bullion. Bears, however, await weakness below $4,235 before placing fresh bets.

Week ahead: Rate hike bets face a crucial data week

Despite the solid drop from the mid-September high, oil prices remained in the driver’s seat for another week, setting the tone in financial markets. Six months have passed since the late-February start of the US-Iran conflict, and there is still no breakthrough in the stalled talks, despite pressure from regional leaders and the rest of the world.

After the Trump Xi summit, markets are trading three clocks

The summit delivered time, not a deal. Trade, oil and chips now each run to a date, and the macro backdrop matters more than the pageantry. Markets wanted a deal and got a calendar date instead. Xi Jinping left Washington on Friday after tea at the White House and a tour of the National Archives.

Fed vs BoJ: Both hiked. The market only believes one of them – and the chart shows which

The Fed and the BoJ have just done something remarkably similar. Both central banks raised interest rates by 25 bps last week, both are confronting inflation risks, and both signal that future decisions will depend on incoming economic data.