WTI sticks to modest gains above $94.00 as Hormuz standoff fuels supply concerns
- WTI regains positive traction on Monday amid the lack of progress in US-Iran peace talks.
- Supply disruption worries due to the Hormuz standoff further support Crude Oil prices.
- Reduced Fed rate cut bets underpin the USD, capping the USD-denominated commodity.
West Texas Intermediate (WTI) – the benchmark US Crude Oil price – kicks off the new week on a positive note and reverses a part of Friday's modest decline, though the upside remains capped. The commodity currently trades below mid-$94.00s, up nearly 1.0% for the day, amid global oil supply concerns.
US President Donald Trump has cancelled a planned visit to Islamabad by his envoys Steve Witkoff and Jared Kushner, even as Iran's Foreign Minister Abbas Araqchi arrived in Pakistan. This comes amid a deadlock over issues that include the blockade of the Strait of Hormuz and keep geopolitical risks in play, which continue to act as a tailwind for Crude Oil prices.
Meanwhile, traffic through the strategic waterway remains largely blocked due to Iran's restrictions on movement and the US naval blockade of Iranian ports. This adds to worries about prolonged disruptions and turns out to be another factor offering support to Crude Oil prices. However, a modest US Dollar (USD) uptick caps any further upside for the commodity.
Investors remain worried that the war-driven surge in energy prices will revive inflationary pressures and force major central banks, including the US Federal Reserve (Fed), to adopt a more hawkish stance. In fact, the current market pricing indicates over 80% chance for the Fed rates to remain at the current range in 2026, which continues to underpin the Greenback.
Nevertheless, the aforementioned fundamental backdrop seems tilted in favor of bullish traders and suggests that the path of least resistance for Crude Oil prices is to the upside. Hence, any corrective slide is more likely to get bought into and remain cushioned. However, it will be prudent to wait for a move beyond the $95.00 mark before positioning for further gains.
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
Haresh Menghani
FXStreet
Haresh Menghani is a detail-oriented professional with 10+ years of extensive experience in analysing the global financial markets.
