Tanker off Saudi Arabia's coast hit by two projectiles, UKMTO reports

A tanker heading southeast through the Arabian Gulf was hit by two unidentified projectiles approximately 72 nautical miles east of Ras Al Khafji, Saudi Arabia, according to a Monday statement from the UK Maritime Trade Operations (UKMTO), Reuters reported.

All crew members were accounted for after the incident, the UKMTO said, adding that the projectiles had hit the vessel’s port side.

How is the market responding?

West Texas Intermediate (WTI) is trading at $100.40 at the time of writing, a decline of 1.66% on the day.

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WTI Oil: Key Questions Answered

What distinguishes WTI Oil?

Among the crude oil varieties traded internationally, WTI, short for West Texas Intermediate, is one of three major types alongside Brent and Dubai Crude. Its relatively low gravity and sulphur content earn it the descriptions “light” and “sweet”, respectively. Regarded as a high-quality oil, it is easy to refine. WTI originates in the United States and reaches the market through the Cushing distribution hub, known as “The Pipeline Crossroads of the World”. As an oil-market benchmark, its price is regularly cited in media coverage.

What drives movements in WTI Oil prices?

Supply and demand underpin WTI Oil prices, as they do those of other assets. Stronger global growth can boost demand, while weak global growth can have the reverse effect. Supply disruptions caused by political instability, wars or sanctions can also affect prices. Another significant influence is the production decisions of OPEC, a grouping of major oil-producing countries. With oil traded predominantly in US Dollars, the currency’s value also matters for WTI Crude Oil prices: a weaker US Dollar can make oil more affordable, while a stronger currency can do the opposite.

How do inventory figures affect WTI Oil prices?

WTI Oil prices respond to the weekly oil stock reports issued by the American Petroleum Institute (API) and the Energy Information Agency (EIA), as inventory movements reflect shifts in supply and demand. A decline in stocks can signal stronger demand and lift oil prices; an increase can point to greater supply and weigh on prices. The API releases its report every Tuesday, followed by the EIA the next day. The two sets of figures are generally close, differing by no more than 1% on 75% of occasions. As the EIA is a government agency, its data is regarded as more reliable.

Why do OPEC decisions matter for 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. These decisions frequently influence WTI Oil prices. Lower quotas can restrict supply and lift oil prices, whereas an increase in OPEC production has the reverse effect. The broader OPEC+ grouping brings in ten additional non-OPEC members, with Russia the most notable among them.