WTI remains subdued around $85.50 ahead of second round of US-Iran talks

WTI eases on softer supply fears as Iran plans second-round US talks before the truce ends.
Trump says VP JD Vance will travel to Pakistan to resume negotiations.
Shipping through the Strait of Hormuz slowed sharply after Iran’s warning shots and a US seizure of an Iranian ship.

Akhtar Faruqui FXStreet

West Texas Intermediate (WTI) oil price declines after registering modest gains in the previous day, trading around $85.40 per barrel during the Asian hours on Tuesday. Crude oil prices ease as supply concerns soften, with reports that Iran will send a delegation to Islamabad for a second round of talks with the US before the truce expires.

Bloomberg reported that US President Donald Trump said Vice President JD Vance will travel to Pakistan to resume negotiations, “either Tuesday night or Wednesday morning.” However, Trump also indicated the truce is unlikely to be extended if no deal is reached this week, adding the Strait of Hormuz will stay blocked until an agreement is secured.

Shipping traffic through the Strait of Hormuz slowed sharply on Monday after weekend tensions, with Iran reportedly firing warning shots at vessels and the US military seizing an Iranian cargo ship. Ship-tracking data showed just one vessel exiting and two entering the Gulf over 12 hours, far below the typical daily flow of around 130 ships, reported by Reuters.

Reuters, citing Citi, noted that if disruptions persist for another month, losses could reach about 1.3 billion barrels, with prices nearing $110 in Q2 2026. Bloomberg added that Kuwait has declared force majeure on oil shipments due to the blockade, while Societe Generale analysts estimate demand has already fallen about 3%.

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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