Key Moments
- WTI trades near $90.30 per barrel in Asian hours on Friday after a nearly 2.5% advance the previous day.
- Oil reverses part of a 5.6% surge triggered by tanker attacks in the Strait of Hormuz and Gulf of Mexico hurricane-related shut-ins.
- Reports indicate the US has drawn up three-day strike plans against Iranian military and energy targets, despite Trump ruling out action before midterms.
WTI Pullback After Trump Comments on Iran
West Texas Intermediate (WTI) crude is trading around $90.30 per barrel in Asian dealings on Friday, easing after almost 2.5% gains in the previous session. The move lower follows social media remarks from US President Donald Trump, who said the United States was holding “productive discussions” with Iran and would not launch an attack on the country before the midterm elections.
Despite signaling a pause in potential military action, President Trump stated that record volumes of crude were currently moving through the Strait of Hormuz and stressed that the US naval blockade of Iranian ports would remain fully in place.
Subsequent leaked reports, however, indicated that the United States had already developed plans for a three-day campaign of targeted strikes aimed at Iranian energy facilities, drone and missile stockpiles, and other strategic locations.
From Sharp Rally to Rapid Reversal
The latest decline in crude comes directly after a powerful rally on Thursday, when oil prices jumped by as much as 5.6%. That surge was driven by a combination of rising maritime risks and weather-related supply disruptions.
Tehran had stepped up attacks on commercial shipping in the Strait of Hormuz, targeting nine vessels over the preceding week. At the same time, offshore output in the Gulf of Mexico was under acute pressure from Hurricane Isaias, which led regional producers to shut in about 1.3 million barrels per day of crude production.
| Market Driver | Detail |
|---|---|
| WTI price level | Around $90.30 per barrel in Asian hours on Friday |
| Previous day move | Nearly 2.5% gain |
| Recent intraday surge | Up to 5.6% on Thursday |
| Gulf of Mexico shut-ins | Approximately 1.3 million barrels per day |
Rising Oil Prices Feed Into US Yields
Strategists at Scotiabank point out that the renewed volatility in energy markets is quickly spilling over into fixed income. They note that “the impact on oil prices and global bond yields is clear, with WTI up $4/bbl on the day and trading back above $90/bbl as the US 10Y threatens fresh multi-decade highs above 5.35% nearing levels last seen in 2002.”
According to Scotiabank, this backdrop represents a fresh examination of investors’ willingness to tolerate higher yields as crude prices climb again.
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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