WTI slumps below $73.00 as traders continue to watch US-Iran peace talks

WTI price tumbles to near $72.75 in Tuesday’s early European session.
US Vice President said Iran will let international nuclear inspections resume after a "good day" of talks.
Traders show cautious optimism about an end to the Middle East conflict.

Lallalit Srijandorn FXStreet

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $72.75 during the early European trading hours on Tuesday. The WTI price falls to the lowest level since early March as traders continue to watch US-Iran moves. Traders brace for the American Petroleum Institute (API) weekly crude oil report, which is due later on Tuesday.

US Vice President JD Vance said on Monday that Iran would allow nuclear inspectors to return to the country after what he called “great progress” on the first day of US-Iran negotiations in Switzerland.

Nonetheless, Iran’s Foreign Minister Abbas Araghchi said earlier that real negotiations on the "nuclear issue" haven't started yet. Washington will mediate another round of talks beginning Tuesday to end clashes in southern Lebanon between Iran-backed Hezbollah and Israel, according to a US State Department official.

Traders will closely monitor further progress in negotiations aimed at securing a lasting peace agreement between the US and Iran. Easing geopolitical tensions and a temporary US license for Iranian oil sales supported expectations of a gradual recovery in the Gulf supply flows, which weigh on the WTI price.

Also, the American Petroleum Institute (API) weekly crude oil report is due later on Tuesday. A larger-than-expected crude oil inventory draw indicates stronger demand and could lift the WTI price, while a bigger build than estimated signals weaker demand or excess supply, which might undermine the WTI price.

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

Lallalit Srijandorn

FXStreet

Lallalit Srijandorn is a Parisian at heart. She has lived in France since 2019 and now becomes a digital entrepreneur based in Paris and Bangkok.

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