WTI hovers around $96.00 as Trump declines nuclear weapon use in Iran
- WTI easing follows Trump’s Iran remarks, but Middle East supply fears keep WTI on track for 5.5% gain.
- Tanker rates hit record highs after Iranian projectile sinks vessel in the Strait of Hormuz.
- US crude stockpiles fell 8.6 million barrels last week, marking the largest drawdown since February.
West Texas Intermediate (WTI) oil price halts its six-day winning streak, trading around $96.10 per barrel during Asian hours on Friday. Crude oil prices eased following comments from US President Donald Trump, who stated that he would not use nuclear weapons in Iran and does not foresee deploying American ground troops to the Islamic Republic, according to a report by Reuters. Trump also noted that he had engaged in discussions regarding nuclear disarmament with Russia and China.
In geopolitical developments elsewhere, Yemen's Houthis launched a deadly missile and drone attack targeting the presidential palace in Aden, the Yemeni government's interim capital, as reported by the BBC on Thursday. The attack resulted in five deaths—including two members of Prime Minister Shaya Al-Zindani’s security detail—and left 16 others injured.
However, West Texas Intermediate (WTI) crude remains on track for a weekly gain of over 5.5%, driven by intensifying supply disruption concerns across the Middle East. The US Central Command confirmed that a Singapore-flagged container ship, which sank in the Strait of Hormuz earlier in the week, was struck by an Iranian projectile. This incident has raised further doubts about the restoration of physical oil flows and propelled tanker rates to record highs.
Concurrently, the International Energy Agency (IEA) announced that its member nations agreed to finalize the release of 100 million barrels of oil—the remainder of a 400-million-barrel intervention pledged in March to mitigate rising fuel prices—Bloomberg reported on Thursday. Following a governing board meeting, the IEA confirmed plans to accelerate distribution, which includes releasing 20 million barrels of diesel as soon as possible. Member countries have already drawn 330 million barrels to date.
Adding to the bullish momentum, Energy Information Administration (EIA) data showed that US crude inventories plunged by 8.6 million barrels last week, marking the largest single-week draw since February. WTI was also positioned to outperform Brent for the week, bolstered by lower shipping costs for US crude that helped stimulate broader demand for American oil.
Oil spikes as Middle East tensions and Gulf of Mexico risks roil markets
Analysts at Rabobank note that, externally, “oil prices surged by approximately 4% following an escalation of tensions in the Middle East and concerns over potential supply disruptions caused by an approaching hurricane in the Gulf of Mexico,” underscoring the renewed vulnerability of energy markets to geopolitical and weather-related shocks.
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.