$99: WTI Oil nears level amid fears of supply disruptions from Gulf countries

Nearly 1% is WTI Oil's gain on Wednesday. Its renewed uptrend takes prices towards $99.00.
Supply disruption fears have intensified amid more attacks on vessels in the Strait of Hormuz and Houthi threats to Saudi Arabian oilfields.
With their positions still far apart, the US and Iran continue to make unsuccessful attempts at negotiations.

About 1% is the gain in US benchmark West Texas Intermediate (WTI) oil so far on Wednesday. Prices have reached a session high just a few cents short of $99.00. Crude has recovered earlier losses as mounting attacks in the Strait of Hormuz and continuing threats to Saudi Arabian oilfields fuel concerns over supply disruptions.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Two tankers caught fire after striking sea mines in the southern Strait of Hormuz, Iran’s Revolutionary Guards Corps (IRGC) announced on Tuesday. The vessels had been attempting to pass through the waterway along a route not authorised by Tehran.

Separately, Yemen's Iran-backed Houthi militias claimed responsibility for attacks on Aramco Oil facilities in Yanbu. Saudi Arabia uses the Red Sea port to bypass the troubled Hormuz corridor.

US-Iran Peace Deal Still Out of Reach

Washington and Tehran have yet to secure a peace agreement. On Tuesday, a senior Pakistani army official reached Tehran for another effort to mediate between the rivals and avert renewed fighting. Markets welcomed the development, sending crude prices sharply lower during Tuesday's US trading session.

By Wednesday, however, American officials had dampened expectations of a quick agreement. Speaking to US media, US Secretary of State Marco Rubio said securing peace with Iran was extremely difficult. He added that economic pressure on the Islamic Republic would continue until Tehran continues targeting commercial vessels in the Strait of Hormuz.

Washington must accept Iran’s conditions before the Strait of Hormuz reopens, Iranian Foreign Minister Abbas Araghchi told Iranian media. With the two sides locked in this cycle, the conflict is entering its eighth month with no clear end in sight.

WTI Oil: Key Questions

WTI Oil: Definition and Characteristics

Traded internationally, WTI Oil takes its name from West Texas Intermediate. Alongside Brent and Dubai Crude, it is one of the three major crude oil types. Its relatively low gravity earns it the description “light”, while its low sulphur content makes it “sweet”. WTI is regarded as high-quality oil that 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, with its price regularly cited in media coverage.

WTI Oil: Main Price Drivers

Supply and demand determine WTI Oil prices, as they do for other assets. Stronger global growth can lift demand, while weaker growth can have the reverse effect. Supply disruptions caused by political instability, wars or sanctions can affect prices. Another major influence is OPEC, a group of leading oil-producing countries whose decisions help shape the market. Because oil is traded primarily in US Dollars, the currency's value also matters for WTI Crude Oil. A weaker US Dollar can make oil more affordable; a stronger currency can have the opposite effect.

WTI Oil: The Impact of Inventory Data

Weekly oil inventory releases from the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence WTI Oil prices by signalling shifts in supply and demand. A fall in stocks can point to stronger demand and lift prices. Rising stocks can indicate greater supply and weigh on prices. API releases its report each Tuesday, followed by EIA the next day. The two sets of figures are generally similar: 75% of the time, they are within 1% of each other. As EIA is a government agency, its data is regarded as more reliable.

12 Nations: OPEC's Influence on WTI Oil Prices

At meetings held twice a year, the 12 oil-producing nations in OPEC (Organization of the Petroleum Exporting Countries) jointly set production quotas for member countries. Those decisions frequently influence WTI Oil prices. Lower quotas can restrict supply and lift oil prices, while increased production has the reverse effect. The broader OPEC+ group adds ten non-OPEC members, with Russia the most prominent.