WTI holds gains near $62.50 due to concerns over tighter global supply
- WTI price rises amid growing concerns over tighter global supply, driven by new US sanctions on Iran.
- The Trump administration announced fresh sanctions aimed at curbing Iran’s Oil exports, including specific measures targeting a China-based "teapot" refinery.
- OPEC received revised output plans from Iraq, Kazakhstan, and other producers, detailing further production cuts to offset earlier overproduction.
West Texas Intermediate (WTI) crude Oil price extends its gains for a second consecutive day, trading around $62.40 per barrel during Asian hours on Thursday. The rally is fueled by concerns over tighter global supply following new US sanctions on Iran.
On Wednesday, the Trump administration announced fresh sanctions targeting Iran’s Oil exports, including measures against a China-based "teapot" refinery. The move aims to ramp up pressure on Tehran amid heightened tensions over its nuclear program. According to a statement from the US Treasury Department, the sanctions are intended to discourage Chinese imports of Iranian Oil as President Trump intensifies his “maximum pressure” campaign, seeking to reduce Iran’s Oil exports to zero.
Additionally, the Organization of the Petroleum Exporting Countries (OPEC) suggested it had received updated plans from Iraq, Kazakhstan, and other producers outlining additional output cuts to compensate for previous overproduction.
However, further gains in Oil prices may be limited. Earlier this week, OPEC, the International Energy Agency (IEA), Goldman Sachs, and JP Morgan all revised down their forecasts for oil prices and demand growth, citing growing global trade tensions.
On the demand side, crude prices found some support from optimism surrounding US-China trade negotiations. China signaled a willingness to engage in talks, provided certain key conditions are met. For the week, Oil prices have climbed over 2%, positioning them for their first weekly gain of the month.
Meanwhile, the World Trade Organization (WTO) lowered its forecast for global goods trade, now expecting a 0.2% decline this year, down sharply from its previous projection of a 3.0% expansion in October.
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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