WTI slides to near $91.50 as Russian diesel inflow offsets geopolitical escalations

US temporarily eased fuel sanctions after Russia agreed to export diesel, easing supply tight spots.
US lawmakers challenged the move's legality, while Ukraine vowed ongoing strikes despite Trump’s energy ceasefire.
Escalating Houthi drone and missile attacks on Saudi Arabia add fresh geopolitical risks to oil markets.

Akhtar Faruqui FXStreet

West Texas Intermediate (WTI) oil price halts its three-day winning streak, trading around $91.50 per barrel during European hours on Tuesday. Crude oil prices fell as traders weighed the impact of new Russian diesel exports against escalating geopolitical tensions.

US President Donald Trump announced that Russia had agreed to supply diesel to global markets, prompting his administration to temporarily lift US sanctions on Russian fuel, measures originally designed to deprive Moscow of revenue for its war on Ukraine. These additional supplies are expected to help alleviate tightness in global fuel markets, tempering some of the supply concerns that had recently driven crude prices upward.

Despite the market reaction, the move faces significant opposition. US lawmakers argued that President Trump’s agreement with Russian President Vladimir Putin appears to violate US law, which prohibits Russian energy imports until Moscow halts its aggression against Ukraine. At the same time, Ukrainian President Volodymyr Zelenskyy vowed to continue strikes against Russian targets, noting that Moscow continues to strike Ukraine’s energy infrastructure in breach of the "energy ceasefire" previously announced by Trump.

Trump administration is facing mounting pressure to support Saudi Arabia in its conflict against Iran-backed Houthi militants in Yemen. This renewed concern comes in the wake of recent missile and drone attacks targeting Riyadh’s main airport.

Brent eases as markets weigh Russian diesel supply prospects

Analysts at Danske Bank note that in commodities, "Brent crude traded around USD 105/bbl this morning, down from around USD 107/bbl last night, as markets weighed the prospect of more Russian diesel entering global markets." This reassessment of potential Russian product flows has prompted a modest pullback in prices after the previous session’s gains.

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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