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WTI falls to near $90.00 after news of Iran proposing reopening Hormuz

  • WTI falls as Iran offered to reopen the Strait of Hormuz within seven days if the US eases pressure.
  • Easing market anxiety from high-volume tanker navigation through the Strait of Hormuz could ease pressure on oil prices.
  • Satellite data revealed Saudi Arabia's Gulf terminals hosted supertankers carrying 14 million barrels over the weekend.

West Texas Intermediate (WTI) extends its losing streak after losing daily gains, trading around $90.20 per barrel during the European hours on Tuesday. Crude oil prices lose ground after Kyodo News noted a senior Iranian official, saying that Iran has offered to reopen the vital Strait of Hormuz within seven days on the condition that the United States takes concrete initial steps toward reducing economic and military pressure on Tehran.

The diplomatic proposal was transmitted to Washington through third-party intermediaries as international leaders gather for the United Nations General Assembly in New York. Iranian officials plan to leverage the summit to engage with mediator nations to help de-escalate tensions and revive broader peace talks.

Geopolitical attention remains focused on US President Donald Trump, who is scheduled to address the UN General Assembly later in the day. His agenda includes a possible side meeting with Iranian President Masoud Pezeshkian, alongside planned talks with Chinese President Xi Jinping and leaders from other Gulf nations throughout the week. Additionally, the Trump administration has proposed establishing a $5 billion fund to support the reconstruction of war-damaged infrastructure across the Middle East.

However, oil prices could see downward pressure as market anxiety eased after energy supplies successfully navigated through the Strait of Hormuz over the weekend. Highlighting this flow, Saudi Arabia moved crude through the Strait of Hormuz at a rate of 2.9 million barrels per day over the past six days. Satellite images also revealed supertankers with a combined capacity of 14 million barrels docked at Saudi Arabia’s Gulf export terminals over the weekend, representing the highest tanker count observed since at least June.

Brent slips back toward $100 as Middle East diplomacy hopes build

Strategists at Deutsche Bank highlight that “markets have put in a strong performance over the last 24 hours,” even as Brent crude “briefly [fell] beneath $100/bbl again as hopes grew for a diplomatic solution in the Middle East.” They note that the move in Brent, which saw the benchmark down “-3.40%,” came against this backdrop of improving sentiment around regional diplomacy.

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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