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WTI holds position above $66.50 amid fresh US sanctions on Iranian Oil, shadow fleet

  • WTI rises but is still set for its eighth straight weekly loss.
  • Crude Oil prices climb following new US sanctions on Iranian oil and Hong Kong-flagged vessels linked to Iran’s shadow fleet.
  • Oil demand struggles due to heightened global trade tensions after Trump threatened a 200% tariff on European wines and champagne.

West Texas Intermediate (WTI) Oil price edges higher on Friday after losing more than 1% in the previous session. However, WTI remains on track for its eighth consecutive weekly decline, trading around $66.70 per barrel during Asian hours. The price uptick comes as fresh US sanctions on Iranian Oil and shipping provide some support.

On Thursday, the US imposed new sanctions targeting Iran’s Oil minister as part of its ongoing "maximum pressure" campaign against Tehran. The sanctions also extend to several Hong Kong-flagged vessels involved in Iran’s shadow fleet, which helps conceal oil shipments, according to the US Treasury Department.

Despite this, crude Oil remains under pressure due to broader macroeconomic concerns. Fears that global trade tensions could dampen demand persist, especially after US President Donald Trump threatened a 200% tariff on all European wines and champagne during Thursday’s early US session, sparking concerns in global markets.

Additionally, uncertainty looms over a proposed US-brokered ceasefire between Russia and Ukraine. Russian President Vladimir Putin stated on Thursday that Moscow agrees with the US proposal but insists that any ceasefire must pave the way for lasting peace and address the root causes of the conflict. European Union (EU) High Representative for Foreign Affairs and Security Policy, Kaja Kallas, suggested that Russia is likely to accept the ceasefire proposal but with conditions, according to Reuters.

Further pressuring Oil prices, the International Energy Agency (IEA) warned that a growing supply surplus could intensify as trade tensions weigh on demand while The Organization of the Petroleum Exporting Countries and its alias, known as OPEC+, ramp up production. The IEA projects that global Oil supply will outpace demand by approximately 600,000 barrels per day (bpd) this year, driven by US-led supply growth. Meanwhile, demand growth is forecast at 1.03 million bpd—70,000 bpd lower than last month’s estimate.

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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