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WTI falls to near $99.50 as Trump truce hopes ease supply fears

  • WTI declines as speculation grows that Trump may end the Iran conflict, easing supply disruption fears.
  • Analysts see the drop as temporary, with sustained declines dependent on fully restored flows through the strait.
  • US average gasoline price topped $4 per gallon on Monday, the highest level in over three years.

West Texas Intermediate (WTI) oil price halts its four-day winning streak, trading around $99.60 per barrel during the Asian hours on Tuesday. Crude oil prices weaken on growing speculation that US President Donald Trump could end the Iran conflict, easing fears of prolonged supply disruptions.

According to The Wall Street Journal, Trump signaled to aides a willingness to halt the campaign even if the Strait of Hormuz remains largely shut. Analysts view the price drop as a short-term reaction, noting that a lasting decline would depend on fully restored flows through the strait.

Meanwhile, continued US troop movements point to conflicting signals and ongoing risks to global energy supply. Iran reportedly struck a Kuwaiti oil tanker near a Dubai port, underscoring mounting threats to shipping in the Persian Gulf. Iran-backed Houthis have also escalated the conflict by targeting Israel, while Tehran is said to be preparing disruptions in the Red Sea.

Reuters, citing GasBuddy data, reported that the US national average gasoline price surpassed $4 per gallon for the first time in over three years on Monday, as the conflict involving the US, Israel, and Iran continues to unsettle global energy markets.

Rising fuel costs have become a political challenge for Trump and the Republican Party ahead of the November midterm elections, as they seek to maintain narrow control in Congress. Higher oil prices are increasingly straining US household budgets already pressured by inflation.

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

Akhtar Faruqui

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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