WTI Crude Holds Above $62 Amid Hormuz, US-Iran Watch

Key Moments

WTI trades near $62.30 during Asian hours on Wednesday, holding modest gains amid elevated Middle East tensions.
Iran temporarily and partially closes parts of the Strait of Hormuz for IRGC naval drills, raising worries over crude supply flows.
Traders await the American Petroleum Institute crude inventory report later on Wednesday for fresh signals on demand and supply.

WTI Holds Gains Above $62 in Asian Session

West Texas Intermediate (WTI), the U.S. crude oil benchmark, is quoted around $62.30 during Asian trading on Wednesday. The contract is trading in positive territory as uncertainty and heightened geopolitical risk in the Middle East underpin prices. Market participants are positioning ahead of the latest American Petroleum Institute (API) weekly oil inventory data, scheduled for release later on Wednesday.

Strait of Hormuz Closure Adds Supply Risk Premium

Iran has announced a temporary, partial closure of sections of the Strait of Hormuz on Wednesday to conduct naval exercises by its Islamic Revolutionary Guard Corps (IRGC), according to Bloomberg. The Strait of Hormuz is described as one of the world’s most important oil transit chokepoints, with about one-third of all waterborne crude exports passing through the passage. The possibility of disruption to crude flows is seen as a supportive factor for WTI in the near term.

Factor	Details	Potential Impact on WTI
Current price level	Around $62.30 during Asian trading on Wednesday	Reflects modest gains amid geopolitical risk
Strait of Hormuz status	Temporary partial closure for IRGC naval exercises	Heightened concern over supply routes may support prices
API inventory report	Due later on Wednesday	Outcome on draws or builds could drive next price move

US-Iran Nuclear Discussions in Focus

Alongside developments in the Strait of Hormuz, investors are closely watching diplomatic efforts between the United States and Iran. Iranian Foreign Minister Abbas Araqchi said on Tuesday that the two countries have reached an understanding on the main “guiding principles” in talks intended to address their long-running nuclear dispute, while stressing that this does not imply that an agreement is imminent. Araqchi characterized discussions with the U.S. as serious and constructive.

Market participants are expected to track these negotiations carefully. Any indications that tensions between Washington and Tehran are easing could reduce geopolitical risk premiums and potentially weigh on crude prices, often referred to as black gold.

API Inventory Data as Near-Term Catalyst

The upcoming API crude oil stockpiles report, due on Wednesday, is a key near-term data point for oil traders. A crude draw that exceeds expectations would signal stronger demand and could support additional gains in WTI. Conversely, a larger-than-forecast build would point to softer demand or excess supply, which may put downward pressure on prices.

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.