In early European hours on Friday, the price of West Texas Intermediate (WTI) crude oil remains around $103.80 per barrel. The price of WTI rose more than 10% as supply concerns intensified following renewed threats from Iran by US President Donald Trump.
President Trump has warned of increasing military action against Iran in the next two to three weeks and issuing powerful threats against Iran. However, he did not explain what steps should be taken to reopen the Strait of Hormuz.
Iranian Foreign Minister Abbas Araghchi responded that recent U.S. attacks on civilian infrastructure would not force a retreat, describing them instead as evidence of chaos and moral decline of the adversary.
Reports indicate that Iran and Oman are preparing a protocol to oversee transit through the Strait of Hormuz, although optimism quickly faded. In an interview with Sputnik, Iranian Deputy Foreign Minister Kazem Gharibabadi said that Tehran is finalizing the project and will soon start talks with Oman to establish a common framework.
Meanwhile, the United Kingdom (UK) is organizing virtual discussions with around 40 countries to explore ways to reopen Hormuz. The United States is not participating after President Trump said it was not America’s responsibility to reopen the route and urged European nations to “go get their own oil.”
Frequently asked questions about WTI crude oil
WTI Oil is a type of crude oil sold on international markets. WTI stands for West Texas Intermediate, one of three main types, including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” due to its relatively low weight and low sulfur content. It is considered a high-quality oil that can be easily refined. It originates in the United States and is distributed through the Cushing Junction, considered the “Crossroads of the World.” It is a reference point for the crude oil market, and the WTI price is often quoted in the media.
Like all assets, supply and demand are key factors influencing the price of WTI crude oil. Therefore, global growth may drive increased demand and, conversely, tender global growth. Political instability, wars and sanctions can disrupt supply and affect prices. Another key factor shaping prices are the decisions of OPEC, the group of major oil-producing countries. The value of the US dollar affects the price of WTI crude oil because oil is mainly sold in US dollars, so a weaker US dollar can make oil more affordable and vice versa.
Weekly crude oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Administration (EIA) influence the price of WTI crude oil. Inventory changes reflect fluctuations in supply and demand. If the data shows a decline in inventories, it may indicate increased demand, which will result in an augment in the price of oil. Higher inventories may reflect increased supply, which causes prices to fall. The API report is published every Tuesday and the EIA report the next day. Their results are usually similar and are within 1% of each other 75% of the time. EIA data is considered more reliable because it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 oil-producing countries that jointly decide on production quotas for member countries at meetings held twice a year. Their decisions often influence the prices of WTI crude oil. When OPEC decides to cut quotas, it can tighten supply, which will push up oil prices. OPEC increasing production has the opposite effect. OPEC+ refers to an expanded group that includes ten additional non-OPEC members, the most notable of which is Russia.
