$90.50 area: WTI retains gains on Middle East supply risks despite sharp weekly decline

Renewed fears over Middle East oil shipments following recent tanker attacks in the Strait of Hormuz lift WTI.
Persistent risks to Gulf transit will keep oil prices supported on pullbacks, according to KCM chief analyst Tim Waterer.
Over 11% in weekly losses loom for oil as US election results fuel expectations of de-escalation.

Around $90.60 per barrel is where West Texas Intermediate (WTI) oil trades during Friday’s European session. Prices are advancing for a second consecutive day, with the continuing Middle East conflict and lingering supply worries providing underlying support. A surge in attacks on tankers in the Gulf and the Strait of Hormuz prompted the rebound. The strait carries most Middle Eastern oil exports, and the attacks revived concerns about disruptions to regional supplies.

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Friday’s gains represent a "technical recovery" from the sharp sell-off sparked by the US elections, Reuters reported, citing KCM chief analyst Tim Waterer. In his assessment, the underlying problems have not been resolved: risks to transit through the Strait of Hormuz remain despite the Democratic victory. Waterer said: "Until there is a credible path to safer, cheaper transit through the Gulf, oil is likely to remain supported on dips and prone to sharp moves on any escalation headlines,"

A weekly loss of over 11% nevertheless remains in prospect for oil. Behind the broader decline are expectations that the Iran war could de-escalate after US President Donald Trump's party suffered election losses. Earlier in the week, prices tumbled as the US midterm results handed the Democratic Party control of both the Senate and the House of Representatives. That outcome encouraged hopes of a diplomatic settlement to the nine-month US-Israeli conflict with Iran.

Hormuz incident heightens oil supply risks

A maritime incident reported by Iran’s Revolutionary Guard at a key chokepoint presents fresh supply risks, according to Danske Bank’s analysts. The bank cited the Guard as saying that “two oil tankers and a tugboat caught fire after allegedly attempting unauthorised routes through the Strait of Hormuz,” highlighting how vulnerable shipments remain through one of the world’s most important oil transit corridors.

WTI Oil: Key Questions Answered

WTI Oil: What Does It Mean?

Among the crude oils traded internationally, WTI stands for West Texas Intermediate. Together with Brent and Dubai Crude, it forms one of the three main crude types. Its relatively low gravity earns it the description “light”, while its low sulphur content makes it “sweet”. This high-quality oil is easy to refine. Produced in the United States, it is distributed through the Cushing hub, known as “The Pipeline Crossroads of the World”. WTI serves as an oil market benchmark, and its price regularly appears in media reports.

WTI Oil Prices: The Main Drivers

Supply and demand underpin WTI oil prices, as they do for all assets. Stronger global growth can lift demand, while weaker growth can have the reverse effect. Supply disruptions caused by political instability, war or sanctions can also affect prices. Another major influence is the production policy of OPEC, a group of leading oil-producing countries. Because oil is traded mainly in US Dollars, the currency’s value also matters for WTI Crude Oil. A weaker US Dollar can make oil more affordable; a stronger one can have the opposite effect.

WTI Oil Prices: The Role of Inventory Data

WTI oil prices respond to weekly inventory releases from the American Petroleum Institute (API) and the Energy Information Agency (EIA). Stock movements signal changes in supply and demand. Falling inventories may point to stronger demand and lift oil prices, whereas rising stocks may indicate greater supply and weigh on prices. The API publishes its report each Tuesday, followed by the EIA the next day. The two sets of figures generally align: 75% of the time, they are within 1% of one another. As the EIA is a government agency, its data is regarded as more reliable.

WTI Oil Prices: OPEC’s Influence

At meetings held twice a year, the 12 oil-producing members of OPEC (Organization of the Petroleum Exporting Countries) jointly set national production quotas. These decisions frequently affect WTI oil prices. Reduced quotas can constrain supply and lift prices, while increased output has the reverse effect. The broader OPEC+ grouping adds ten non-OPEC members, with Russia the most prominent.