WTI trades near $94.00 after paring recent losses amid escalating Middle East conflict

Houthi attacks on Saudi oil facilities and regional shipping vessels are supporting crude oil prices.
Iran stepped up waterway strikes in response to tougher US port blockades and recent sanctions.
Potential US plans to ease shadow fleet sanctions are capping oil price increases.

West Texas Intermediate (WTI) oil price pares its daily losses, remaining in negative territory and trading around $94.00 per barrel during European hours on Thursday. Oil prices have found support following an escalating conflict between Saudi Arabia and Yemen's Houthis, alongside renewed attacks on maritime shipping in the region.

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Yemen's Houthis vowed on Wednesday to continue strikes targeting Saudi airports and energy infrastructure, shortly after an attack that reportedly caused extensive damage to the headquarters of state oil giant Saudi Aramco. Describing these facilities as legitimate targets, the Houthis cited retaliation for Saudi strikes in Yemen, signaling a further escalation of a conflict reignited by the broader US-Iran confrontation in the Gulf.

The maritime situation in the region has deteriorated rapidly, with a container ship and a dry bulk carrier sinking near the Strait of Hormuz over the past 24 hours after being struck by projectiles in separate incidents. Attacks around the vital waterway have surged over the past ten days, with Iran stating it is stepping up strikes in response to a US port blockade and tougher sanctions introduced last month. Additionally, ongoing Ukrainian strikes against Russian energy infrastructure continue to keep market participants on edge.

However, crude oil price gains have been capped by potential regulatory shifts in the United States. The Trump administration is considering easing sanctions on "shadow fleet" vessels that transport oil and petroleum products from sanctioned nations including Russia, Iran, and Venezuela.

A US official confirmed on Wednesday that the proposed policy shift aims to lower record-high global freight rates. The discussions come on the heels of President Donald Trump temporarily lifting sanctions on Russian diesel fuel, a move that has drawn sharp criticism from Ukrainian President Volodymyr Zelenskiy, European allies, and several Senate Republicans.

Analysts at Deutsche Bank highlight that the earlier move higher in Brent came “amidst no signs of progress in the US-Iran conflict,” noting that the price action “added to the inflationary concerns that had already mounted after the CPI print.” This combination of unresolved geopolitical tension and fresh US inflation data reinforced a more cautious near-term stance on the Oil complex.

WTI Oil FAQs

What is WTI Oil?

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.

What factors drive the price of WTI Oil?

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.

How does inventory data impact the price of WTI Oil

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.

How does OPEC influence the price of WTI Oil?

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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