WTI rises above $63.00 amid potential supply disruption from Russia
- WTI price climbs on Russian supply risks after Ukrainian drone strikes.
- European Union officials are evaluating potential sanctions targeting companies in India and China involved in Russia’s Oil trade.
- Oil demand prospects improved ahead of a possible Federal Reserve rate cut on Wednesday.
West Texas Intermediate (WTI) Oil price extends its gains for the third consecutive session, trading around $63.20 during the Asian hours on Tuesday. Crude Oil prices received support after a potential supply disruption from Russia following Ukrainian drone attacks on its energy infrastructure and mounting US pressure on buyers of Russian crude.
Ukraine attacked the Primorsk Oil terminal last week, a key export hub capable of handling up to 1 million barrels per day. Over the weekend, it also struck a major processing unit at Russia's Kirishi refinery, which has a capacity of about 355,000 barrels per day.
Kyiv has escalated its campaign against Russia’s energy infrastructure in a bid to undermine Moscow’s war effort, as peace negotiations remain stalled. Concerns over potential supply disruptions from Russia, responsible for more than 10% of global Oil production, have pushed Oil prices higher, Reuters reported, citing IG market analyst Tony Sycamore.
Additionally, reports suggest the European Union (EU) is weighing sanctions on companies in India and China that facilitate Russia’s Oil trade as part of its latest package of restrictions. On Monday, US Treasury Secretary Scott Bessent said Washington would refrain from imposing additional tariffs on Chinese goods to curb Beijing’s purchases of Russian Oil unless European nations also move to levy steep duties on China and India.
Traders geared up for an anticipated rate cut from the US Federal Reserve this week that could boost Oil demand. The Fed is expected to lower rates by 25 basis points at its September meeting, though there remains a slight chance of a 50-basis-point cut. Markets have also factored in continued easing through 2026 to help stave off a potential recession.
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
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.
