WTI ends two-day run of losses as fresh developments unfold in the Middle East

Supply worries linked to Middle East tensions lift WTI back above $100, reversing two days of declines.
Geopolitical risks remain high following claims of a strike on a Saudi refinery and reports that the US could take action against Iran.
With Sunday’s OPEC+ meeting ahead, traders also weigh Iran’s willingness to pursue diplomacy.

A persistent geopolitical risk premium in oil prices is supporting a recovery in West Texas Intermediate (WTI) on Wednesday, as tensions across the Middle East remain unresolved. The rebound reverses the previous two days’ losses. The US crude benchmark is trading near $102.25 a barrel at the time of writing, a gain of more than 2.50% for the day.

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Supply concerns underpinning the rise followed a claim by Yemen’s Iran-aligned Houthis that they launched a missile strike on Saudi Arabia’s largest oil refinery on Tuesday. There was no immediate confirmation from Saudi authorities of the alleged attack on the facility, which has a capacity of 550,000 barrels per day.

Concerns intensified after the Wall Street Journal reported that Washington had told Gulf states to prepare for a possible brief but intense military campaign against Iran following the US midterm elections on November 3. Asked by reporters on Wednesday about a potential post-election attack on Iran, US President Donald Trump said “anything is possible”.

Even so, diplomatic engagement remains under way. In a post on X, Iranian Foreign Minister Abbas Araghchi said Iran “continues to give diplomacy a chance to succeed”. He added that the country remains in close contact with intermediaries about ideas for carrying out its seven-day plan in less than a week. Under the proposal, the Strait of Hormuz would reopen and talks would resume if the US accepts Iran’s demands.

A new draft agreement was delivered to Iran in Tehran on Sunday by Qatari mediators, Reuters reported earlier on Wednesday. Iran was assessing the draft, with a response expected by the end of the week. An Iranian official, however, rejected the proposal as unacceptable.

Pressure on global supplies also featured in the World Bank’s latest outlook. The bank projects that oil supply will shrink by 5.2% in 2026, marking the steepest decline in more than four decades apart from the 2020 recession. It also expects energy prices to climb 32% to a four-year high. A further escalation in the Middle East or continuing damage to Russian oil infrastructure could drive energy prices higher, the bank warned.

US crude oil stocks, meanwhile, declined by 1.462 million barrels, data from the Energy Information Administration (EIA) showed. The draw was larger than the expected 300,000 barrels and came after a fall of 3.061 million barrels in the preceding week.

Sunday’s OPEC+ meeting is the next focus for traders. Sources quoted by Reuters expect producers to leave their December output targets unchanged.

WTI Oil: Key Questions Answered

What Defines WTI Oil?

Among the crude oils traded internationally, WTI, short for West Texas Intermediate, is one of three major varieties alongside Brent and Dubai Crude. Its relatively low gravity earns it the description “light”, while its low sulphur content makes it “sweet”. Regarded as a high-quality oil, it is readily refined. WTI originates in the United States and is distributed through the Cushing hub, known as “The Pipeline Crossroads of the World”. As an oil market benchmark, its price is regularly cited in media reports.

Which Factors Shape WTI Oil Prices?

Supply and demand determine WTI oil prices, as they do for other assets. Stronger global growth can therefore increase demand, while weaker growth can have the reverse effect. On the supply side, political instability, wars and sanctions can cause disruptions that affect prices. Another major influence is the set of decisions taken by OPEC, a grouping of leading oil-producing countries. Since oil is traded mainly in US Dollars, the currency’s value also affects WTI crude oil prices: a weaker US Dollar can make oil more affordable, whereas a stronger one can make it less so.

Why Do Inventory Figures Matter for WTI Oil Prices?

WTI oil prices respond to the weekly inventory reports issued by the American Petroleum Institute (API) and the Energy Information Agency (EIA), as movements in stocks reflect shifts in supply and demand. A fall in inventories may point to stronger demand and lift oil prices. An increase, by contrast, can signal greater supply and put downward pressure on prices. The API releases its report each Tuesday, followed by the EIA the next day. The two sets of figures are generally close, with the difference staying within 1% on 75% of occasions. Because the EIA is a government agency, its data is regarded as more reliable.

Through Which Decisions Does OPEC Affect WTI Oil Prices?

Production quotas agreed by OPEC (Organization of the Petroleum Exporting Countries) often influence WTI oil prices. The group comprises 12 oil-producing nations, which jointly set quotas for member countries at meetings held twice a year. Lower quotas can restrict supply and lift oil prices; higher production has the reverse effect. The broader OPEC+ grouping brings together OPEC and ten additional non-OPEC members, of which Russia is the most prominent.