Two projectiles hit tanker off Saudi Arabia's coast, UKMTO reports

Two unidentified projectiles struck a tanker in the Arabian Gulf. Reuters reported that the UK Maritime Trade Operations (UKMTO) said on Monday the vessel was sailing southeast, approximately 72 nautical miles east of Ras Al Khafji, Saudi Arabia, when it was hit.

The vessel was hit on its port side, the UKMTO reported, adding that all crew members had been accounted for after the incident.

WTI price reaction

West Texas Intermediate (WTI) is trading at $100.40 at the time of writing, a decline of 1.66% on the day.

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WTI Oil: Key Questions

WTI Oil: Definition and Characteristics

West Texas Intermediate, abbreviated to WTI, is a crude oil grade traded internationally. Alongside Brent and Dubai Crude, it is one of the three major types. Its relatively low gravity earns it the description “light”, while its low sulphur content makes it “sweet”. Regarded as a high-quality oil, WTI is straightforward 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: Main Price Drivers

Supply and demand underpin WTI oil prices, as they do those of 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 policy set by OPEC, a group of leading oil-producing countries. WTI crude oil prices also respond to the value of the US Dollar. With oil traded predominantly in US Dollars, a weaker currency can make it more affordable; a stronger US Dollar can have the opposite effect.

WTI Oil: The Impact of Inventory Data

Weekly inventory releases from the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence WTI oil prices by revealing shifts in supply and demand. Falling stocks can signal stronger demand and push prices higher. Rising inventories, by contrast, can point to greater supply and put downward pressure 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: 75% of the time, they are within 1% of each other. 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 nations in OPEC (Organization of the Petroleum Exporting Countries) jointly set production quotas for members. These decisions frequently affect WTI oil prices. A reduction in quotas can constrain supply and lift prices, 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 notable.