WTI hovers around $65.50 ahead of another US-Iran nuclear talks

WTI price steadies amid persistent US-Iran tensions threatening potential supply disruptions.
Traders await the third round of US–Iran nuclear talks in Geneva on Thursday.
EIA data showed US crude stockpiles jumped 15.989 million barrels, the largest build since February 2023.

Akhtar Faruqui FXStreet

West Texas Intermediate (WTI) Oil price remains steady after two days of losses, trading around $65.40 per barrel during the European hours on Thursday. Crude Oil prices hold steady amid ongoing United States (US)-Iran tensions that threaten potential supply disruptions.

Markets are closely monitoring the third round of US-Iran nuclear talks in Geneva on Thursday. US President Donald Trump recently warned of possible military action if negotiations fail, while Iran stated that US military bases across the Middle East would be considered legitimate targets, raising concerns of a broader regional conflict.

According to Reuters, analysts at ING Group noted that the outcome of the talks will be pivotal for Oil prices. A constructive agreement could lead to a gradual unwinding of an estimated $10 per barrel geopolitical risk premium currently priced into the market.

However, Oil gains remain capped by oversupply concerns. Data from the Energy Information Administration (EIA) showed US Crude Oil Stocks Change surged by 15.989 million barrels last week, the largest weekly build since February 2023, following a prior draw of 9.014 million barrels. Additional pressure stems from Saudi Arabia nearing its highest crude export levels in almost three years and Iran accelerating tanker loadings.

Meanwhile, the US Department of the Treasury announced it would authorize companies to seek licenses to resell Venezuelan Oil to Cuba’s private sector, a move that could help alleviate the island’s severe fuel shortages.

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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