WTI slides towards 101.00 after Trump rules out immediate Iranian strikes

WTI retreated as US President Trump ruled out military strikes against Iran for the time being.
Geopolitical risks remain high amid Houthi strikes on Saudi targets and the possibility of Iranian retaliation after the elections.
To address high diesel prices, Trump introduced costly policy steps, including a relaxation of sanctions on Russian fuel.

West Texas Intermediate (WTI) crude is giving up ground during Monday’s Asian session, trading near $101.10 after gaining over 4% in the previous session. The pullback followed US President Donald Trump’s decision to rule out immediate military action against Iran. According to Al Jazeera, he stated, “there will not be a strike today,” after earlier suggesting that Washington might have to “finish the job” or potentially secure an agreement with Tehran as Iranian and Houthi threats to American interests in the region intensified.

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The prospect of renewed strikes on Iran nevertheless remains a concern after this week’s Israeli elections and next week’s US midterm elections. Reports suggest Iran is ready to retaliate against Israel and the UAE.

Regional tensions also increased after Yemen’s Houthis said on Sunday that attacks on Saudi Arabia’s King Khalid Airport in Riyadh would continue, Reuters reported. Only hours earlier, Saudi officials had announced the resumption of flights at the airport despite repeated strikes by the group.

Hostilities continued through the weekend. After the Houthis claimed responsibility for Saturday’s attacks on the Saudi airport and oil facilities, Saudi Arabia said on Sunday that it had intercepted further missiles and drones. The leading oil exporter resumed some operations at its main airport on Sunday after earlier Houthi strikes caused damage, while the militant group pledged to press ahead with its offensive.

Persistently high diesel prices, meanwhile, are prompting President Donald Trump to pursue a series of expensive and politically contentious measures as the November midterm elections draw closer. His administration’s efforts to bring down costs include offering farmers billions of dollars, loosening rules for truckers, relaxing sanctions on Russian fuel and pressing European allies to release emergency oil reserves.

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Elevated geopolitical risks should support crude prices over the coming weeks, according to TD Securities. Explaining its view, the bank said, “we expect crude oil will remain skewed to the upside in the near term as escalation risk ahead of Israeli elections and US midterm elections remains elevated.” In the bank’s assessment, this enduring geopolitical risk premium supports a positive outlook for oil even amid wider market uncertainty.

WTI Oil: Frequently Asked Questions

What distinguishes WTI Oil?

Among the crude oil varieties traded internationally, WTI, short for West Texas Intermediate, is one of the three main types alongside Brent and Dubai Crude. Its relatively low gravity earns it the description “light”, while its low sulphur content makes it “sweet”. These characteristics make WTI a high-quality oil that is straightforward to refine. Produced in the United States, it is distributed through the Cushing hub, regarded as “The Pipeline Crossroads of the World”. WTI serves as an oil market benchmark, with its price regularly cited by the media.

What determines WTI Oil prices?

Supply and demand underpin WTI oil prices, as they do for other assets. Stronger global growth can lift demand, whereas weaker growth can have the reverse effect. Supply disruptions caused by political instability, conflict or sanctions can also move prices. Another major influence is the set of decisions taken by OPEC, a grouping of leading oil-producing countries. Since oil is primarily traded in US Dollars, the value of the US Dollar also affects WTI crude prices: a weaker Dollar can make oil more affordable, while a stronger one can have the opposite effect.

How do inventory figures affect WTI Oil prices?

WTI oil prices respond to the weekly oil inventory releases from the American Petroleum Institute (API) and the Energy Information Agency (EIA), as stock movements reflect shifts in supply and demand. A decline in inventories may signal stronger demand and lift oil prices; a build-up may indicate greater supply and weigh on prices. The API publishes its report every Tuesday, followed by the EIA the next day. The two sets of figures tend to be similar, coming within 1% of each other 75% of the time. As the EIA is a government agency, its data is regarded as more reliable.

How do OPEC’s decisions affect WTI Oil prices?

At meetings held twice a year, the 12 oil-producing nations that make up OPEC (Organization of the Petroleum Exporting Countries) jointly set production quotas for member countries. These decisions frequently influence WTI oil prices. Lower quotas can constrain supply and drive prices higher, while an increase in OPEC production has the reverse effect. The broader OPEC+ grouping brings in ten additional non-OPEC members, with Russia the most prominent among them.