WTI edges up towards $96.00 as uncertainty surrounds US-Iran peace

WTI finds support following a nearly 7% decline this week as concerns over Middle East supplies ease.
Despite Israel suggesting an attack could take place this week, Trump indicated there were no immediate plans to strike Iran.
Fresh peace proposals came from mediators, although Iran’s security chief said Washington’s response remained unsatisfactory.

Uncertainty over the ongoing US-Iran peace talks is supporting crude prices, with West Texas Intermediate (WTI) oil rising for a second consecutive day. During Wednesday’s Asian session, the benchmark is trading near $96.10 per barrel as investors assess the negotiations.

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New proposals aimed at narrowing differences are being assessed by both countries, according to Qatar’s Foreign Ministry spokesperson. Iran’s national security chief, however, said in a social media post that Washington’s response was still unsatisfactory.

According to the Financial Times, Donald Trump said the US had no immediate plans to attack Iran and appeared to be getting what it wanted. Although the US remained prepared to act if necessary, he added that there might be no reason to do so. His comments came despite Israeli Prime Minister Benjamin Netanyahu suggesting an attack could occur later this week.

Earlier this week, defensive US strikes on Iran targeted surface-to-air missile systems that had been used against American assets. Their limited scale, however, indicates that a return to large-scale military operations is not imminent.

Despite the recovery, WTI, the US oil benchmark, is still around 6% lower for the week so far. Hopes of a diplomatic breakthrough, together with indications that Middle Eastern crude exports are recovering, continue to drive the weekly decline.

WTI Oil: Key Questions Answered

What Does WTI Oil Refer To?

Traded on international markets, WTI is a crude oil grade whose name stands for West Texas Intermediate. Alongside Brent and Dubai Crude, it is one of the three major types. Its relatively low gravity and sulphur content give 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, and its price is regularly cited in media reports.

Which Factors Shape WTI Oil Prices?

Supply and demand primarily determine WTI oil prices, as they do for other assets. Stronger global growth can lift demand, while weaker growth can have the reverse effect. Supply disruptions arising from political instability, wars or sanctions can also affect prices. Another important influence is the policy stance of OPEC, a group of major oil-producing countries. Since oil is traded mainly in US Dollars, the value of the US Dollar also matters for WTI crude prices: a weaker currency can make oil more affordable, while a stronger one can have the opposite effect.

How Do Inventory Figures Affect WTI Oil Prices?

WTI oil prices respond to weekly inventory reports from the American Petroleum Institute (API) and the Energy Information Agency (EIA), as stock movements signal shifts in supply and demand. A fall in inventories may point to stronger demand and lift oil prices. Conversely, rising stocks may indicate greater supply and weigh on prices. The API releases its report every Tuesday, followed by the EIA the next day. The two reports generally produce similar findings, with their results within 1% of each other 75% of the time. As the EIA is a government agency, its figures are regarded as more reliable.

How Do OPEC Decisions Affect 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 influence WTI oil prices. Lower quotas can constrain supply and lift prices, whereas increased OPEC production has the reverse effect. The broader OPEC+ grouping brings in ten additional non-OPEC members, with Russia the most notable among them.