WTI Near $98 as Iran Conflict Fuels Oil Market Rally

Key Moments

WTI crude oil trades around $97.85 in early European hours on Monday amid rising geopolitical risk.
Traders focus on potential US military action against Iran’s Kharg Island export facilities and threats to broader energy infrastructure.
The International Energy Agency plans a record release of 400 million barrels from strategic reserves, which could limit further price gains.

Geopolitical Tensions Drive WTI Toward $97.85

West Texas Intermediate (WTI), the US crude oil benchmark, is trading near $97.85 during early European trading on Monday. Prices are firm as the administration of US President Donald Trump considers military strikes on key Iranian oil export infrastructure on Kharg Island, an OPEC member’s critical hub. Market participants are also positioning ahead of the American Petroleum Institute (API) weekly inventory data, scheduled for release later on Tuesday.

Strait of Hormuz Risks and Market Reaction

Concerns over supply have intensified following US strikes on Iran’s Kharg Island oil hub and as President Trump called on allied nations to assist in reopening the Strait of Hormuz. These developments have helped lift WTI prices.

Trump stated on Monday that he is in discussions with other countries regarding efforts to police the Strait of Hormuz, noting that Israel is working with the US to secure the crucial shipping corridor.

The US President also indicated that any Iranian interference with transit through Hormuz could trigger further attacks on energy infrastructure. The Strait of Hormuz has been effectively closed since US-Israel operations commenced on February 28.

“The U.S. strikes on Kharg Island and Trump’s threat to hit Iran’s oil infrastructure mark a major escalation in the war,” said Natasha Kaneva, head of global commodity strategy at JPMorgan.

IEA Strategic Release Seen as a Potential Price Cap

On the supply side, the International Energy Agency (IEA) is preparing a historic drawdown of 400 million barrels from strategic reserves, a move that may limit additional upside in WTI prices. The agency stated that it will release a record 400 million barrels of oil to help mitigate the economic fallout from the US-Israel conflict with Iran.

The coordinated release of emergency reserves by IEA member countries is expected to temporarily increase available supply and may help prevent an extreme surge in oil prices.

Market Driver	Description	Potential Impact on WTI
US-Iran tensions	US strikes on Kharg Island and threats against broader Iranian energy infrastructure	Supports prices due to heightened supply risk
Strait of Hormuz closure	Transit through Hormuz effectively halted since February 28 amid US-Israel operations	Increases fears of export disruptions, bullish for crude
IEA reserve release	Planned record 400 million barrel release from strategic stocks	Adds temporary supply, may cap sharp price spikes
API inventory data	Weekly US stockpile report due Tuesday	Could reinforce or offset current price momentum

WTI Oil: Key Background and Market Drivers

What Is WTI Oil?

WTI Oil is a type of crude oil traded on international markets. The term WTI refers to West Texas Intermediate, one of three major crude benchmarks alongside Brent and Dubai Crude. WTI is commonly described as “light” and “sweet” because of its relatively low gravity and sulfur content, respectively. It is viewed as a high-quality crude that is straightforward to refine.

WTI is produced in the United States and distributed through the Cushing hub, often called “The Pipeline Crossroads of the World.” It serves as a key benchmark for the global oil market, and WTI prices are frequently cited in financial media.

Primary Factors Influencing WTI Prices

WTI Oil prices are primarily determined by supply and demand dynamics. Global economic performance can influence demand, with stronger growth typically increasing consumption and weaker growth reducing it. Political instability, conflicts, and sanctions can disrupt production or transportation, affecting supply and price.

Decisions by the Organization of the Petroleum Exporting Countries (OPEC), a group of major oil producers, are another important driver. Because crude is mostly traded in US Dollars, fluctuations in the value of the Dollar also influence WTI prices: a weaker Dollar can make oil relatively cheaper for holders of other currencies, and a stronger Dollar can have the opposite effect.

Role of Inventory Data in WTI Trading

Weekly inventory statistics released by the American Petroleum Institute (API) and the Energy Information Agency (EIA) are closely monitored by WTI traders. Shifts in crude stockpiles reflect changing supply and demand conditions. A decline in inventories can signal stronger demand or tighter supply, often supporting higher prices, while an increase can point to looser market conditions and weigh on prices.

The API publishes its report every Tuesday, followed by the EIA on Wednesday. The two sets of figures generally align, with results within 1% of each other 75% of the time. The EIA data is generally regarded as more reliable because it is produced by a government agency.

OPEC’s Influence on WTI Oil

OPEC is an organization of 12 oil-producing countries that collectively determine production quotas for members at meetings held twice a year. These decisions can significantly affect WTI prices. Reductions in OPEC output quotas tend to tighten global supply and push prices higher, while increases in quotas can have a dampening effect.

OPEC+ refers to an expanded framework that includes 10 additional non-OPEC producers, with Russia being the most prominent among them. The broader group’s coordinated output decisions can further shape global supply conditions and, in turn, WTI pricing.