WTI slides below $84.00 on firmer USD but US-Iran tensions limit deeper losses

WTI turns lower for the second straight day amid a firmer USD, though the downside seems limited.
The geopolitical risk premium stemming from the US-Iran standoff should support the black liquid.
A fall in US SPR oil stocks to the lowest level since 1982 could further limit losses for the commodity.

Haresh Menghani FXStreet

West Texas Intermediate (WTI) – the benchmark US Crude Oil price – attracts fresh sellers following an intraday uptick to the $85.35 region and turns lower for the second straight day. The commodity slides below $84.00 during the early European session, though the downside potential seems limited.

The US Dollar (USD) is seen building on its modest recovery from the lowest level since May 14, touched last week, as inflation risks stemming from volatile energy prices keep bets for at least one Federal Reserve (Fed) rate hike in 2026 on the table. This turns out to be a key factor undermining demand for USD-denominated commodities, including crude oil prices, though the risk of a further escalation of US-Iran tensions could help limit deeper losses.

In the latest developments surrounding the Middle East crisis, Treasury Secretary Scott Bessent on Monday issued a warning for countries to cut any financial ties with Iran or risk being cut out of the dollar-based financial system. Meanwhile, Iran has vowed to shut down all oil exports from the Gulf if the economic war continues. The Iranian regime has also issued a fresh warning to ships not to pass through the Strait of Hormuz without permission.

Meanwhile, US Defense Secretary Pete Hegseth said on Monday the US would not rule out using military force against Iran. This keeps the geopolitical risk premium in play and might continue to act as a tailwind for crude oil prices. Moreover, a fall in oil stocks in the US Strategic Petroleum Reserve (SPR), to the lowest level since November 1982, warrants caution before positioning for an extension of the pullback from a three-week high, touched last Friday.

WTI 4-hour chart

Technical Analysis

WTI US Oil retains a near-term bullish bias above the 100-period Exponential Moving Average (EMA) pivotal support at $82.61 on the 4-hour chart. This backs the case for the emergence of some dip-buying interest despite the recent pullback from the mid-$86.00s. Moreover, a sustained hold above the $82.00 handle keeps the focus on a potential recovery toward recent cycle highs, while a break below the EMA would hint at a deeper corrective phase.

(The technical analysis of this story was written with the help of an AI tool. Know more.)

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

Haresh Menghani

FXStreet

Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.

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