WTI steadies around $87.50 despite renewed supply concerns
- WTI may regain ground as escalating Middle East conflicts renewed severe supply anxieties.
- The US launched third-wave retaliatory strikes on Iranian coastal targets Wednesday following an Iranian ballistic missile attack from Isfahan.
- Tehran threatened full hostilities if Israel continues its military campaign against Hezbollah in Lebanon.
West Texas Intermediate (WTI) oil price experiences volatility after registering over 2.5% losses in the previous day, trading around $87.40 per barrel during the Asian hours on Wednesday. Crude oil prices advanced in earlier hours as intensifying Middle East conflicts renewed severe supply anxieties.
Following a brief drop in prices on Tuesday when Israel and Iran temporarily suspended hostilities, the conflict quickly escalated again. According to reports, the US launched a third wave of retaliatory strikes on Iranian coastal targets on Wednesday after Iran fired at least three ballistic missiles from Isfahan. This followed an initial round of US strikes on Tuesday, which Washington called a proportional response to Iran downing a US helicopter gunship near the critical Strait of Hormuz.
Diplomatic efforts to secure a lasting peace have hit a standstill. Tehran warned it would resume full hostilities if Israel continues its military campaign against the Hezbollah militia in Lebanon. Israel's refusal to halt these attacks has severely hindered the Trump administration's efforts to transition a fragile, temporary ceasefire into a permanent settlement.
Meanwhile, physical supply tightness is compounding market anxieties. Industry data from the API revealed that US crude inventories plunged by 9.1 million barrels last week, hitting their lowest level in four months as buyers scrambled to replace supplies disrupted by the Persian Gulf turmoil. Despite the ongoing three-month-old war and struggling peace talks, the U.S. Energy Secretary noted on Tuesday that ship traffic and oil exports through the Strait of Hormuz are currently rising.
Silver FAQs
Silver is a precious metal highly traded among investors. It has been historically used as a store of value and a medium of exchange. Although less popular than Gold, traders may turn to Silver to diversify their investment portfolio, for its intrinsic value or as a potential hedge during high-inflation periods. Investors can buy physical Silver, in coins or in bars, or trade it through vehicles such as Exchange Traded Funds, which track its price on international markets.
Silver prices can move due to a wide range of factors. Geopolitical instability or fears of a deep recession can make Silver price escalate due to its safe-haven status, although to a lesser extent than Gold's. As a yieldless asset, Silver tends to rise with lower interest rates. Its moves also depend on how the US Dollar (USD) behaves as the asset is priced in dollars (XAG/USD). A strong Dollar tends to keep the price of Silver at bay, whereas a weaker Dollar is likely to propel prices up. Other factors such as investment demand, mining supply – Silver is much more abundant than Gold – and recycling rates can also affect prices.
Silver is widely used in industry, particularly in sectors such as electronics or solar energy, as it has one of the highest electric conductivity of all metals – more than Copper and Gold. A surge in demand can increase prices, while a decline tends to lower them. Dynamics in the US, Chinese and Indian economies can also contribute to price swings: for the US and particularly China, their big industrial sectors use Silver in various processes; in India, consumers’ demand for the precious metal for jewellery also plays a key role in setting prices.
Silver prices tend to follow Gold's moves. When Gold prices rise, Silver typically follows suit, as their status as safe-haven assets is similar. The Gold/Silver ratio, which shows the number of ounces of Silver needed to equal the value of one ounce of Gold, may help to determine the relative valuation between both metals. Some investors may consider a high ratio as an indicator that Silver is undervalued, or Gold is overvalued. On the contrary, a low ratio might suggest that Gold is undervalued relative to Silver.
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.
