Four tankers destroyed after striking mines near Strait of Hormuz, Iran’s IRGC says

Iran's Islamic Revolutionary Guard Corps (IRGC) said on Wednesday that four oil tankers had been destroyed, Reuters reported. The vessels struck naval mines while attempting to pass through a route described as prohibited south of the Strait of Hormuz.

The tankers remained on fire, according to a statement, which also reported the seizure of two other vessels.

1.30% Decline in WTI

West Texas Intermediate (WTI) is down 1.30% on the day. At the time of writing, it is trading at $94.55.

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WTI Oil: Key Questions Answered

WTI Oil: Definition and Characteristics

West Texas Intermediate, or WTI, is crude oil traded internationally and 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. This high-quality oil is considered easy to refine. Produced in the United States, it 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 Prices: Main Drivers

Supply and demand determine WTI oil prices, as they do for all assets. Stronger global growth can lift demand, while weaker growth can have the reverse effect. Supply disruptions caused by political instability, wars and sanctions can affect prices. Another major influence is OPEC, a group of leading oil-producing countries whose decisions help shape prices. WTI crude oil is also sensitive to the value of the US Dollar because oil trades predominantly in US Dollars. A weaker US Dollar can therefore make oil more affordable, while a stronger currency can have the opposite effect.

Weekly Inventory Data: Implications for WTI Oil

WTI oil prices respond to weekly inventory reports from the American Petroleum Institute (API) and the Energy Information Agency (EIA). Inventory movements reflect shifts in supply and demand. A drawdown may signal stronger demand and lift oil prices; a build may point to greater supply and weigh on prices. API releases its report every Tuesday, followed by EIA the next day. The two reports generally show similar results, coming within 1% of each other 75% of the time. As EIA is a government agency, its figures are regarded as more reliable.

12 OPEC Nations: Their Influence on 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 affect WTI oil prices. Lower quotas can constrain supply and lift prices, while an increase in OPEC production has the reverse effect. The broader OPEC+ group includes ten additional non-OPEC members, most notably Russia.