WTI rises to near $96.00 amid US-Iran peace uncertainty
- WTI gains support after falling nearly 7% this week due to easing Middle East supply fears.
- Trump signaled no immediate plans to strike Iran, though Israel hinted an attack could come this week.
- Mediators offered new peace proposals, but Iran’s security chief declared Washington's current response unsatisfactory.
West Texas Intermediate (WTI) oil extends gains for the second successive day, trading around $96.10 per barrel during Asian hours on Wednesday. Crude oil prices gain as investors grappled with uncertainty surrounding ongoing peace negotiations between the US and Iran.
Meanwhile, Qatar’s Foreign Ministry spokesperson stated that both countries are currently evaluating new proposals put forward by mediators to bridge their differences. However, Iran’s national security chief indicated in a social media post that Washington’s response remains unsatisfactory.
US Donald Trump stated that the US has no immediate plan to strike Iran and seems to be getting what it wants, according to the Financial Times. He added that while the US is ready to act if needed, there may be no reason to do so, despite Israeli Prime Minister Benjamin Netanyahu hinting at an attack later this week.
The US conducted defensive strikes against Iran earlier this week, targeting surface-to-air missile systems used against American assets. Nevertheless, the limited scope of these strikes suggests there is no immediate return to large-scale military operations.
Overall, the WTI, US oil benchmark, remains down around 6% so far this week. The decline continues to be driven by optimism over a potential diplomatic breakthrough alongside signs of a recovery in Middle Eastern crude exports.
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.
