Iran calls on US to lift blockade as proof it wants peace

The United States (US) must remove its naval blockade and demonstrate a genuine commitment to ending the war through diplomacy, Iran’s Foreign Minister Abbas Araghchi said on Wednesday, according to Bloomberg.

Araghchi said: “Iran is prepared to give diplomacy another chance if we see strong evidence of a sincere desire on the part of the US to achieve a just and honourable solution to permanently end this conflict,”

Tehran’s warnings also escalated significantly. According to Fars News, an Iranian official threatened to target US political figures should American strikes resume.

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In a separate development, five drones launched towards Saudi Arabia were intercepted and destroyed, the Saudi-led coalition said early Wednesday.

According to two US officials and two people familiar with the matter, the US military has been quietly reducing troop numbers at bases across the Middle East in recent days.

WTI trades lower

$97.60 is the price of West Texas Intermediate (WTI) at the time of writing. It is down 0.32% on the day.

WTI Oil: Key Questions

WTI Oil Explained

West Texas Intermediate, abbreviated to WTI, is a crude oil grade traded internationally. Alongside Brent and Dubai Crude, it is one of three major grades. Its relatively low gravity and sulphur content account for the descriptions “light” and “sweet”, respectively. This high-quality oil is regarded as easy to refine. Produced in the United States, WTI is distributed through the Cushing hub, known as “The Pipeline Crossroads of the World”. As an oil market benchmark, its price is regularly cited by the media.

WTI Oil Price Drivers

Supply and demand underpin WTI oil prices, as they do other asset prices. Stronger global growth can lift demand, while weaker growth can have the reverse effect. Supply disruptions arising from political instability, war or sanctions can affect prices. Another major influence is OPEC, a group of leading oil-producing countries, through its production decisions. WTI crude oil prices are also sensitive to the US Dollar because oil is traded predominantly in that currency. A weaker US Dollar can therefore make oil more affordable, while a stronger one can have the opposite effect.

Oil Inventories and WTI Prices

Weekly inventory figures from the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence WTI oil prices by signalling shifts in supply and demand. Falling stocks can point to stronger demand and push prices higher. Rising inventories, by contrast, can indicate greater supply and weigh on prices. The API releases its report every Tuesday, followed by the EIA the next day. The two sets of figures tend to be similar: 75% of the time, they are within 1% of each other. As the EIA is a government agency, its data is regarded as more reliable.

OPEC’s Role in WTI Oil Pricing

At meetings held twice a year, the 12 oil-producing member nations of OPEC (Organization of the Petroleum Exporting Countries) jointly set their production quotas. These decisions frequently influence WTI oil prices. A reduction in quotas can constrain supply and lift prices; an increase in production has the reverse effect. The broader OPEC+ group includes ten additional non-OPEC members, with Russia the most notable.