WTI steadies around $85.00 as Trump indicates potential Iran deal
- WTI falls after President Trump stated a peace deal with Iran could be finalized this weekend.
- Traders remain cautious as normalizing oil flows requires clearing mines, restarting production fields, and repairing facilities damaged.
- Data shows three LNG tankers turned off transponders and slipped out of the strait toward Asia, tracking firms reported.
West Texas Intermediate (WTI) oil price remains subdued after registering over 5.5% losses in the previous day, trading around $85.00 per barrel during the Asian hours on Friday. Crude oil prices declined following statements from US President Donald Trump indicating that a peace agreement with Iran could be finalized as early as this weekend. This diplomatic pivot comes on the heels of the President delaying planned military strikes, though he had previously warned that the US could target Iran's energy infrastructure.
While a final text has not yet been approved by either side, Iran's semi-official Fars news agency reported that Tehran is likely to accept the deal. According to Trump, the agreement would safely reopen shipping lanes through the critical Strait of Hormuz and include firm commitments from Iran to forgo the development of nuclear weapons.
Despite the potential breakthrough, market traders remain cautious because fully normalizing global oil flows faces significant logistical hurdles. Even if a deal is struck, the energy sector must still navigate clearing naval mines from the strait, restarting idled production fields, and repairing vital facilities previously damaged by drone and missile attacks.
The security situation in the waterway also remains clouded by conflicting reports. On Wednesday, the U.S. military stated on X that commercial vessels continue to transit the strait safely and denied that any U.S. warships had been hit. Conversely, Iranian state media claimed that US ships in the area had been targeted by missiles and drones.
Meanwhile, shipping data from LSEG and Kpler reveals that three additional LNG tankers have slipped out of the strait toward Asia with their transponders turned off. Maritime disruptions also persist, with India reporting an incident involving a vessel off the Port of Shinas in Oman on Thursday, marking the third such event this week. Nevertheless, Indian refiners told Reuters they have secured a sufficient supply of crude to meet their operational needs through at least August.
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.
