WTI remains below $90.00 due to Middle East export recovery
- Middle East crude exports rebounded to 17.5 million barrels daily, reaching 98% of pre-war levels.
- US SPR releases of up to 40 million barrels and rising inventories helped ease immediate supply fears.
- Benchmark oil prices remain on track for monthly gains driven by ongoing US-Iran conflict disruptions.
West Texas Intermediate (WTI) oil price edges higher after registering nearly 4.5% losses in the previous day, trading around $88.50 per barrel during Asian hours on Wednesday. Crude oil prices eased as energy flows from the Middle East showed clear signs of improvement.
Analysts noted that the 10-day average of crude exports from the region recovered to 17.5 million barrels per day, reaching 98% of pre-war levels. This recovery comes as Saudi Arabia resumed crude exports through its East-West pipeline at roughly half its capacity, complemented by a steady stream of covert shipping continuing through the Strait of Hormuz.
Adding to the downward pressure on prices, another major release of emergency reserves in the US helped alleviate lingering supply concerns. The US government plans to tap the Strategic Petroleum Reserve (SPR) for up to 40 million barrels to combat soaring fuel costs at home. Furthering this bearish sentiment, industry data indicated that US crude inventories rose by 1 million barrels last week.
Despite these recent pullbacks, the US oil benchmark remains on track for a third consecutive monthly gain. Ongoing support for prices continues to be driven by the prolonged US-Iran conflict and widespread disruptions to global supply.
Oil stays in focus as US-Iran tensions underpin latest gains
Strategists at Scotiabank stress that “the market’s primary focus remains centered on oil prices,” with the latest advance in crude attributed to “the renewed deterioration in US/Iran negotiations and President Trump’s rejection of last week’s Iranian proposal to reopen the Strait of Hormuz.” They note that these geopolitical developments are reinforcing the recent upswing in energy markets and keeping oil firmly at the forefront of investors’ attention.
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.