WTI drifts higher to near $66.00 as Trump threatens Russia with new sanctions
- WTI price rises to around $65.90 in Tuesday’s early Asian session.
- The US threatened to hit buyers of Russian exports with sanctions if there's no deal between Russia and Ukraine in 50 days.
- Tariff uncertainty and ongoing trade jitters might undermine the WTI price.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $65.90 during the early Asian trading hours on Tuesday. The WTI price edges higher amid concerns over the United States' sanctions on Russia that may affect global supplies.
US President Donald Trump late Monday announced new weapons for Ukraine and threatened sanctions on buyers of Russian exports unless Russia agrees to a peace deal in 50 days. A White House official said Trump was referring to 100% tariffs on Russian exports as well as so-called secondary sanctions, which target third countries that buy a country's exports.
Last week, Trump said that he would make a "major statement" on Russia on Monday, expressing his frustration with Russian President Vladimir Putin over the lack of progress in ending the war in Ukraine.
Furthermore, firming demand signals from China might contribute to the WTI’s upside. China’s crude imports hit a 10-month high, rising 7.4% on the year in June to 12.14 million barrels per day, according to customs data released on Monday. This figure registered the highest since August 2023.
On the other hand, the uncertainty surrounding Trump’s tariff might weigh on the WTI price. Investors will closely monitor the outcome of US trade negotiations with key trading partners. The European Union (EU) and South Korea said on Monday they were working on trade deals with the US that would soften the blow from looming tariffs as Washington threatens to impose levies from August 1. Intensifying US tariff pressures could undermine the price of black gold, as tariffs can lead to trade wars, slowing down global trade and economic activity.
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.
