WTI holds gains above $89.50 amid renewed Middle East hostilities
- WTI advances as the US strikes Iranian targets in Hormuz after a base attack and mine-laying attempts.
- Iran claims retaliation via missile strikes on US regional bases and targets in Jordan.
- US Treasury reports 17 million barrels cleared Hormuz Monday, signaling Iran lacks control despite economic strain.
West Texas Intermediate (WTI) oil price rebounds after registering losses in the previous day, trading around $89.60 during the Asian hours on Thursday. Crude oil prices advance as investors assessed renewed hostilities in the Middle East alongside efforts to reopen the Strait of Hormuz. President Donald Trump said the latest attacks on Iran would be short-lived despite indicating that the US remains prepared for further strikes, while reiterating claims that the US controls Hormuz.
US President Donald Trump announced fresh strikes against Iranian targets around the Strait of Hormuz, framing them as retaliation for Tehran’s attempts to lay mines in the strategic waterway and a previous attack on a US military base. Trump further warned of a significantly larger military response should Iran choose to retaliate. In response, Iran claimed it had already targeted US bases across the region and launched missiles toward Jordan.
Adding to the tension, US Treasury Secretary Scott Bessent stated that Iran’s economy has entered an "acceleration phase" of bankruptcy. He emphasized that despite the conflict, 17 million barrels of crude oil passed through the Strait of Hormuz on Monday, signaling that Tehran lacks control over the vital trade corridor.
US tanker strikes mark escalation in Strait of Hormuz tensions
Strategists at BNY highlight that the latest US action in the Strait of Hormuz represents a notable shift in policy, stressing that “the move marks the first time that the U.S. has hit Iranian tankers in retaliation for attacks on ships in the Strait of Hormuz, rather than for violating the naval blockade.” They note that this change underpins the recent surge in geopolitical risk premia embedded in benchmark oil prices.
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.