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WTI climbs above $72.00 on heightened geopolitical tensions in the Middle East

  • WTI price rises to $72.05 in Friday’s early Asian session, up 6.20% on the day.
  • Heightened geopolitical tensions in the Middle East support the WTI price. 
  • Trump’s tariff threats and uncertainty could undermine the WTI price. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $72.05 during the Asian trading hours on Friday. The WTI price climbs to the highest level since February after Israel carried out airstrikes against targets in Iran, raising fears of escalating geopolitical tensions in the region. 

Late Thursday, Israeli Defense Minister Israel Katz said there had been a “preemptive strike against Iran” and declared a state of emergency as the country prepared for retaliation. Israel's Prime Minister Benjamin Netanyahu said early Friday that Israel struck at the heart of Iran's nuclear enrichment program and nuclear weaponization program. Netanyahu also targeted Iran’s main enrichment facility in Natanz, adding that the operation will continue for as many days as it takes. 

Fresh confrontations in the Middle East, the region that accounts for a third of global crude production, raise the fears of geopolitical risks and boost the WTI price. “We are back in an environment of heightened geopolitical uncertainty, leaving the oil market on tenterhooks and requiring it to start pricing in a larger risk premium for any potential supply disruptions,” said Warren Patterson, head of commodities strategy at ING Groep NV.

On the other hand, the latest tariff threats from US President Donald Trump might weigh on the WTI price. Trump said that the trade deal with China is ‘done,’ but details and confirmation from China were lacking. Additionally, Trump stated that he intends to send letters to dozens of US trading partners in the next one to two weeks, setting unilateral tariffs ahead of the July 9 deadline that came with his 90-day pause.

Oil traders will closely monitor the developments surrounding US-China trade talks. Economic uncertainty triggered by Trump’s tariff policy could drag the WTI lower. Later on Friday, the advanced US Michigan Consumer Sentiment will be the highlight. 

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.

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Lallalit Srijandorn

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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