Two-day slide ends for WTI amid new Middle East developments

Above $100: WTI recovers from two days of losses as Middle East tensions heighten supply fears.
Geopolitical risk remains high following a claimed strike on a Saudi refinery and reports of potential US military action against Iran.
With Sunday’s OPEC+ meeting ahead, traders weigh Iran’s stated willingness to pursue diplomacy.

West Texas Intermediate (WTI) is trading around $102.25 a barrel at the time of writing. The US crude benchmark is up more than 2.50% on Wednesday, recovering the losses of the previous two days. Continued Middle East tensions are sustaining a geopolitical risk premium in oil prices.

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A missile strike on Saudi Arabia’s largest oil refinery was claimed on Tuesday by Yemen’s Iran-aligned Houthis, preceding the price recovery. Saudi authorities did not immediately confirm the reported attack on the facility, which has a capacity of 550,000 barrels per day.

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

Despite the tensions, diplomacy remains active. In a post on X, Iranian Foreign Minister Abbas Araghchi said Iran “continues to give diplomacy a chance to succeed”. He added that Iran remains in close contact with intermediaries on ideas for putting its seven-day plan into effect in less than a week. Under the proposal, the Strait of Hormuz would reopen and talks would resume if the US accepted 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 considering the proposal, with a response expected by the end of the week. An Iranian official, however, rejected it as unacceptable.

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

US crude oil stocks declined by 1.462 million barrels, Energy Information Administration (EIA) data showed. The draw exceeded the expected 300,000 barrels and followed a fall of 3.061 million barrels in the preceding week.

Sunday’s OPEC+ meeting is the next focus for traders. Producers are expected to leave December output targets unchanged, Reuters reported, citing sources.

WTI Oil: Key Questions Answered

WTI Oil: Definition and Characteristics

Sold in international markets, WTI is a grade of crude oil. Its name stands for West Texas Intermediate, and it ranks alongside Brent and Dubai Crude as one of the three major grades. Its relatively low gravity earns it the description “light”, while its low sulphur content makes it “sweet”. These qualities make it a high-quality oil that is straightforward to refine. Produced in the United States, WTI 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 by the media.

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 weak growth can have the reverse effect. On the supply side, political instability, war and sanctions can cause disruptions and affect prices. Production decisions by OPEC, the group of major oil-producing countries, are another important influence. WTI crude oil prices also respond to the US Dollar’s value because oil is traded mainly in US Dollars. A weaker US Dollar can therefore make oil more affordable, while a stronger currency can make it less affordable.

WTI Oil: The Effect of Inventory Data

WTI oil prices react to weekly inventory releases from the American Petroleum Institute (API) and the Energy Information Agency (EIA). Stock movements signal shifts in supply and demand. A decline can point to stronger demand and support oil prices; a build can suggest greater supply and weigh on prices. The API releases its report each 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.

WTI Oil: OPEC’s Influence on Prices

At meetings held twice a year, the 12 oil-producing members of OPEC (Organization of the Petroleum Exporting Countries) jointly set production quotas for member nations. These decisions frequently affect WTI oil prices. Reducing quotas can constrain supply and lift oil prices, whereas increasing production has the reverse effect. The broader OPEC+ group includes ten additional countries outside OPEC, most notably Russia.