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WTI recovers to near $86.50 as Strait of Hormuz remains closed

  • WTI price recovers some lost ground to near $86.40 in Tuesday’s early Asian session. 
  • The IEA is reportedly considering a joint release of emergency Oil reserves. 
  • Trump predicted the war with Iran would be resolved very soon. 

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $86.40 during the early Asian trading hours on Tuesday. The WTI price faces extreme volatility following a massive spike to nearly $120 per barrel in the previous session. 

The International Energy Agency (IEA) on Monday was reportedly discussing a coordinated release of emergency oil reserves among member countries to stabilize markets. Such actions are typically deployed when major supply disruptions threaten global energy security. The release of emergency oil reserves by countries coordinated through the IEA can add temporary supply to the market and prevent a sharp spike in oil prices.

Additionally, US President Donald Trump said that he plans to waive oil-related sanctions and predicted the war with Iran would resolve “very soon” as he confronted mounting economic and political pressures after days of dramatic fluctuations in oil markets. His remarks ease concerns about a prolonged conflict in the Middle East, which drags the WTI price lower. 

Nonetheless, the Strait of Hormuz remained all but closed, with no finalized plans on how nations will safeguard ships passing through the key waterway. The ongoing war in the Middle East and shutdown of the Strait of Hormuz, where about one-fifth of global oil shipments pass, have triggered a major disruption to global fuel supplies. This, in turn, might boost the WTI price in the near term.  

Traders brace for the release of the American Petroleum Institute (API) report, which will be released later on Tuesday. A larger-than-expected crude oil inventory draw indicates stronger demand and could lift the WTI price, while a bigger build than estimated signals weaker demand or excess supply, which might weigh on the WTI price.

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.

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Lallalit Srijandorn

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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