WTI drops to near 101.00 as Trump rules out immediate Iranian strikes

WTI fell after US President Trump ruled out immediate military strikes against Iran.
Houthi attacks on Saudi targets and potential Post-Election Iranian retaliation keep geopolitical risks elevated.
Trump implemented costly policy measures, including easing Russian fuel sanctions, to tackle high diesel prices.

Akhtar Faruqui FXStreet

West Texas Intermediate (WTI) oil price declines after registering over 4% gains in the previous trading day, hovering around $101.10 during Asian hours on Monday. Crude oil prices declined after US President Donald Trump ruled out immediate military action against Iran, stating, “there will not be a strike today,” according to Al Jazeera. This followed earlier remarks where Trump suggested Washington might need to “finish the job” or potentially reach a deal with Tehran amidst growing Iranian and Houthi threats against American interests in the region.

However, fears remain that strikes against Iran could resume following this week’s Israeli elections and next week’s US midterm elections, with Iran reportedly prepared to retaliate by targeting Israel and the UAE.

Adding to regional tensions, Yemen's Houthis declared on Sunday that they will continue targeting Saudi Arabia's King Khalid Airport in Riyadh, as reported by Reuters. This announcement came just hours after Saudi officials stated that airport flights had resumed despite repeated attacks by the group.

Conflict in the area persisted over the weekend, with the Houthis claiming attacks on the Saudi airport and oil facilities on Saturday, while Saudi Arabia reported on Sunday that it had intercepted additional missiles and drones. The top oil exporter restarted partial operations at its main airport on Sunday following damage from previous Houthi strikes, even as the militant group vowed to maintain its offensive.

Meanwhile, with the November midterm elections fast approaching, President Donald Trump is deploying a range of costly and politically fraught measures to address stubborn diesel prices. To lower costs, his administration has offered billions of dollars to farmers, relaxed regulations for truckers, eased sanctions on Russian fuel, and pressured European allies to release emergency oil stocks.

Oil outlook stays biased higher as election risks keep escalation premium in play

According to TD Securities, crude prices are likely to remain supported in the coming weeks, with the bank highlighting that “we expect crude oil will remain skewed to the upside in the near term as escalation risk ahead of Israeli elections and US midterm elections remains elevated.” This persistent geopolitical risk premium, in their view, continues to underpin a constructive bias for oil despite broader market uncertainties.

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

Akhtar Faruqui

FXStreet

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

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