WTI holds above $72.50 amid tariff concerns
- WTI price posts modest gains to around $72.85 in Friday’s early Asian session.
- Trump plans to impose tariffs of 25% on Canadian and Mexican goods on Saturday.
- Investors will closely monitor the OPEC+ ministerial meeting on Monday.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $72.85 during the early Asian session on Friday. The WTI price edges higher as traders assess the impact of threatened US tariffs on Canadian and Mexican crude imports that could take effect on Saturday.
US President Donald Trump has threatened to impose a 25% tariff as early as Saturday on imports from Canada and Mexico, but he has not yet decided whether to include oil imports in the measure. The White House said late Wednesday that both countries can avoid this if they act swiftly to close their borders to fentanyl.
Oil traders will closely monitor the outcome of the meeting by the Organization of the Petroleum Exporting Countries and its allies, including Russia (OPEC+), scheduled for next Monday. Trump reiterated his call for OPEC and Saudi Arabia to lower oil prices, saying that a decline in crude prices would end the conflict in Ukraine.
On the other hand, crude oil prices might be bolstered by tougher US sanctions on Russia's oil industry. The measures targeted Gazprom Neft and Surgutneftgas, which exported around 970,000 bpd of Russian crude during the first 10 months of 2024. A decline in Russian crude oil exports is supportive of crude oil prices.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
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