WTI holds gains near $75.00 as supply disruptions persist through the Strait of Hormuz
- WTI climbs as US-Israeli strikes on Iran escalate tensions and disrupt Oil and gas flows through Strait of Hormuz.
- OPEC has cut output by nearly 1.5 million bpd due to storage constraints and blocked exports.
- MarineTraffic shows 200 ships anchored off Iraq, Saudi Arabia and Qatar; UKMTO reports eight vessels hit since Saturday.
West Texas Intermediate (WTI) Oil price remains stronger for the third successive session, trading around $74.80 per barrel during the Asian hours on Thursday. Crude Oil prices climb as supply disruptions persist amid ongoing Middle East war.
United States (US) and Israeli strikes on Iran have escalated regional tensions, prompting Iranian retaliatory attacks on energy infrastructure and snarling vital Middle East Oil and gas flows, particularly through the strategically crucial Strait of Hormuz, which handles about a fifth of global oil and LNG supplies.
Officials told Reuters that Iraq, OPEC’s (Organization of the Petroleum Exporting Countries) second-largest producer, has reduced output by nearly 1.5 million barrels per day (bpd) due to storage constraints and blocked exports, and could shut in up to 3 million bpd within days if flows do not resume.
MarineTraffic data shows at least 200 ships, including Oil and LNG tankers, are anchored off Iraq, Saudi Arabia and Qatar. British navy agency UKMTO said eight vessels, including Safeen Prestige, have been hit since Saturday.
Hostilities escalated after a US submarine reportedly sank an Iranian warship off the coast of Sri Lanka. US Defense Secretary Pete Hegseth called it the “first such attack on an enemy since World War II.” The broader campaign has entered its sixth day, heightening fears of a prolonged conflict.
Reuters cited Nikos Tzabouras of Tradu.com, who said a four- to five-week US campaign, Iran’s effort to regionalize the conflict, and the effective closure of the Strait of Hormuz could upend supply-demand dynamics and lift crude toward $100.
US President Donald Trump offered risk insurance and naval escorts for vessels transiting the Persian Gulf, while Treasury Secretary Scott Bessent outlined additional measures to stabilize Gulf markets.
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
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.
