• WTI dips as Middle East shipments rebound toward pre-war levels, boosted by Saudi pipeline restoration.
• Flows through the Strait of Hormuz hit 13.2 million barrels daily despite ongoing U.S.-Iran territorial disputes.
• Tehran received a US proposal on reopening the waterway, while OPEC+ prepares to hold output quotas steady.

West Texas Intermediate (WTI) oil price loses ground after posting modest gains in the previous day, trading around $89.10 per barrel during Asian hours on Thursday. Crude oil prices declined as investors weighed signs of a recovery in Middle East flows against an ongoing impasse in United States (US)-Iran negotiations.

Regional crude shipments neared pre-war levels after Saudi Arabia restored half the capacity of its East-West pipeline, pushing flows through the Strait of Hormuz up to 13.2 million barrels per day.

However, prices may rebound as markets remain cautious about the durability of this recovery without a lasting agreement to end the war, particularly with both Tehran and Washington claiming full control over the strategic waterway.

Meanwhile, Iranian spokesperson Fatemeh Mohajerani confirmed Tehran received a U.S. proposal regarding the strait's reopening, as OPEC+ prepares to keep November output quotas unchanged at its upcoming weekend meeting.

Oil benchmarks diverge as US taps final strategic reserves

Analysts at Deutsche Bank point out that the US has announced it will "offer up to 40m barrels from its Strategic Petroleum Reserve, in what would be its last drawdown in the coordinated global release of oil announced earlier in the year." They note that this additional supply "helped oil prices stage a decent intraday turnaround," even as the complex remained under pressure into the close. Deutsche Bank highlights that "Brent settled -2.59% lower while WTI crude (-3.48%) saw a larger decline to a 4-week low of $89.48/bbl," with the move accompanied by a widening in the spread between the two benchmarks "as the current front-month Brent future expires today."

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.

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.