WTI Oil moves above $100 as supply disruption fears resurface

WTI oil has breached $100, putting it on course for a gain of more than 10% over the past three weeks.
Supply disruption fears have resurfaced as Saudi oilfields come under attack and Iran strengthens its control over the Strait of Hormuz.
Oil prices have received additional support from reports of plans for further joint US and Israeli strikes on Iran.

Oil extends its gains on Friday, with the US benchmark West Texas Intermediate (WTI) climbing above $100 per barrel and heading for an increase of more than 10% over the past three weeks. Supporting the advance are reports of a growing number of incidents this week involving vessels seeking passage through the crucial Strait of Hormuz, alongside renewed attacks by Iran-backed Houthis on Saudi oilfields.

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Fears over disrupted supplies from Gulf countries have returned to the fore as Iranian forces strengthen their hold over the vital Strait of Hormuz shipping corridor. According to the Iranian Islamic Revolutionary Guard Corps (IRGC) navy, four additional tankers were struck while carrying out “illegal” oil transfers. Another three vessels hit mines as they tried to navigate the waterway.

Is an end in sight as the Middle East conflict enters its eighth month?

At the same time, attacks on Saudi Arabian targets by Yemen’s Houthi militias are escalating. Strikes earlier this week on Aramco’s Shaybah Oilfield and Dammam airport left four people dead and eight others injured.

With no clear prospect of an end, the conflict pitting the US and Israel against Iran is nearing its eighth month. Citing US officials, a New York Times report on Thursday suggested that the US and Israel might be preparing plans for another round of coordinated strikes following November’s midterm elections.

In response, the IRGC warned that additional strikes on Iranian territory would lead Tehran to adopt an offensive strategy and invade neighbouring countries. Such a move would broaden the regional conflict and place further pressure on crude oil flows.

WTI Oil: Frequently Asked Questions

What defines WTI oil?

Among the crude oil varieties traded internationally, WTI, or West Texas Intermediate, is one of three major types, alongside Brent and Dubai Crude. Its relatively low gravity earns it the description “light”, while its low sulphur content makes it “sweet”. Regarded as a high-quality oil, WTI is easy to refine. Production takes place in the United States, with distribution routed through the Cushing hub, known as “The Pipeline Crossroads of the World”. WTI serves as an oil market benchmark, and its price features regularly in media coverage.

What determines WTI oil prices?

Supply and demand underpin WTI oil pricing, as they do for other assets. Stronger global growth can lift demand, whereas weaker growth can have the reverse effect. Supply disruptions caused by political instability, wars or sanctions can also affect prices. Another significant influence is the policy of OPEC, a grouping of major oil-producing countries. Since oil is traded mainly in US Dollars, the currency’s value also matters for WTI crude oil prices: a weaker US Dollar can make oil more affordable, while a stronger one can have the opposite effect.

Why do inventory figures affect WTI oil prices?

WTI oil prices respond to the weekly inventory reports issued by the American Petroleum Institute (API) and the Energy Information Agency (EIA), as stock changes reflect shifts in supply and demand. Falling inventories can signal stronger demand and push oil prices higher. Rising stocks, by contrast, can point to greater supply and weigh on prices. The API releases its report each Tuesday, followed by the EIA the next day. The two sets of findings generally align, coming within 1% of one another 75% of the time. As the EIA is a government agency, its figures are regarded as more reliable.

Why do OPEC decisions matter for WTI oil prices?

At meetings held twice a year, the 12 oil-producing nations belonging to OPEC (Organization of the Petroleum Exporting Countries) jointly set production quotas for members. These decisions frequently affect WTI oil prices. A reduction in quotas can constrain supply and lift prices; an increase in output can have the reverse effect. The broader OPEC+ grouping brings in ten additional non-OPEC members, with Russia the most prominent among them.