WTI falls to near $91.00 as Middle East crude exports rebound

WTI eases as Saudi Arabia and the UAE led the supply increase, boosting regional shipments to their highest levels since late February.
Ongoing uncertainty regarding US-Iran negotiations continues to keep market volatility and geopolitical risks elevated.
Iranian officials expressed skepticism about halting hostilities or reopening the Strait of Hormuz before November's US midterms.

Akhtar Faruqui FXStreet

West Texas Intermediate (WTI) oil has pared its recent gains from the previous day, trading around $91.10 per barrel during European hours on Tuesday. Crude oil prices have eased following a September rebound in exports from key Middle East producers. According to Kpler data reported by Reuters, shipments from the region climbed to 16.328 million barrels per day (bpd), marking their highest volume since conflict erupted between Iran and the US-Israeli alliance in late February. This uptick in supply was primarily driven by boosted production and exports from Saudi Arabia and the United Arab Emirates.

Despite the recent price drop, oil prices could quickly rebound due to persistent uncertainty surrounding US-Iran negotiations. Iranian officials have voiced skepticism about resolving hostilities or reopening the strategic Strait of Hormuz before the US midterm elections in November, keeping geopolitical risks elevated across the region.

Diplomatic efforts remain active, however, as Iranian Foreign Minister Abbas Araqchi stated that Tehran expects a US response to its latest proposal regarding the Strait of Hormuz. US and Iranian representatives engaged in separate mediator talks recently, with upcoming discussions slated to evaluate an amended version of Iran's original offer.

Although recent meetings in New York yielded limited progress, punctuated by President Donald Trump's rejection of Tehran's initial proposal, reports indicate the US administration may still consider sanctions relief and unfreezing Iranian assets if substantial advances are made toward a nuclear agreement.

Oil stays in the spotlight as US-Iran tensions drive fresh gains

Strategists at Scotiabank note that the market’s primary focus “remains centered on oil prices,” with the latest advance in crude attributed to geopolitical developments. They highlight that the recent gains “reflect the renewed deterioration in US/Iran negotiations and President Trump’s rejection of last week’s Iranian proposal to reopen the Strait of Hormuz,” keeping energy markets firmly at the forefront of investor attention.

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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