WTI Oil retreats from $100 peak as Venezuela sanctions ease, Middle East risks persist
- Oil prices edge lower after hitting an intraday peak above $100.
- Easing US sanctions on Venezuela helps reduce supply concerns.
- Middle East war and attacks on energy infrastructure keep upside risks elevated.
West Texas Intermediate (WTI) US Oil trades around $97.20 per barrel on Thursday, down 1.68% on the day after reaching an intraday high of $100.15, as markets balance improving supply conditions against escalating geopolitical risks.
Crude Oil prices pull back after the United States (US) partially eased sanctions on Venezuela, allowing companies to resume limited dealings with the country’s state-owned Oil firm. This move helps ease global supply concerns, further supported by the resumption of crude flows from Iraq’s Kirkuk fields to Turkey’s Ceyhan port.
At the same time, the White House announced a temporary waiver of the Jones Act, allowing foreign vessels to transport fuel between US ports for 60 days in an effort to improve domestic distribution and reduce logistical bottlenecks.
In parallel, the US Treasury signals that additional measures could be taken to boost supply, including potentially lifting restrictions on certain Iranian Oil volumes or tapping into strategic reserves, which also contributes to capping price gains.
However, geopolitical risks continue to support a bullish bias. Tensions in the Middle East intensify following Israeli strikes on Iran’s South Pars gas field, followed by Iranian retaliation targeting energy infrastructure in Qatar. Attacks have also been reported on facilities in Saudi Arabia and the United Arab Emirates (UAE), raising fears of significant disruptions to global energy supply.
A joint statement from the United Kingdom (UK), France, Germany, Italy, the Netherlands and Japan also emphasises the major economies’ commitment to stabilising energy markets. The signatories state that they are prepared to work with certain producer countries to increase supply and ensure the security of transit through the Strait of Hormuz, whilst calling on Iran to immediately cease its threats and attacks against energy infrastructure and maritime transport.
According to Rabobank, this environment creates structural risks for energy markets, with potential damage to key infrastructure and the threat of lasting supply reductions. The bank also highlights the risk of further market fragmentation, particularly if the US were to impose restrictions on Oil exports.
In this context, despite bearish supply-side developments, the geopolitical risk premium remains elevated, limiting downside pressure on WTI and keeping prices near key psychological levels.
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
Ghiles Guezout
FXStreet
Ghiles Guezout is a Market Analyst with a strong background in stock market investments, trading, and cryptocurrencies. He combines fundamental and technical analysis skills to identify market opportunities.
