WTI holds losses around $82.50 on renewed US-Iran diplomatic hopes
- WTI drops amid renewed hopes for a diplomatic solution to the US-Iran conflict.
- Pakistan confirmed ongoing US-Iran negotiations aimed at restoring stability in the Strait of Hormuz.
- Saudi Arabia discussed forming a maritime coalition with 43 nations to safeguard key shipping routes.
West Texas Intermediate (WTI) oil price remains in the negative territory for the second successive day, trading around $82.60 per barrel during the Asian hours on Friday. Crude oil prices have lost ground following renewed hopes for a diplomatic solution to the US-Iran conflict. Pakistan's Foreign Ministry spokesperson Tahir Andrabi confirmed that negotiations between the United States (US) and Iran are currently ongoing to restore stability, particularly within the critical Strait of Hormuz.
Additionally, shipping through the strait has picked up in recent days, with the US claiming its navy successfully escorted several tankers across the waterway. This increase in tanker traffic after a recent slowdown has allowed millions of barrels of crude to pass through safely.
Meanwhile, efforts to secure regional water transport are expanding into the Red Sea. Saudi Arabia held talks with representatives from 43 countries to discuss forming a maritime coalition aimed at safeguarding key shipping routes. This initiative follows a blockade imposed last week by Iran-backed Houthi militants, which threatened commercial trade in the region.
Despite the recent dip, West Texas Intermediate (WTI) crude remains on track to post a monthly gain of over 18%, driven by fears that renewed fighting between the US and Iran could trigger further disruptions to Middle Eastern energy supplies. The US military launched fresh strikes on Iranian targets in response to Tehran’s attacks on US assets across the region.
Kazakhstan's primary oil export terminal in the Black Sea closed on Thursday for the third time this month, suspending crude tanker loadings after Ukrainian drones struck two vessels near Russia's Novorossiysk port.
According to TD Securities, the risk backdrop in the oil market continues to deteriorate, with the bank cautioning that "supply risks keep piling up" even as investors focus on positioning and short-term flows. The firm argues that the accumulation of disruptions and geopolitical flashpoints is increasingly difficult to ignore, reinforcing its view that tightening physical balances should remain a key driver for crude prices.
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.
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