Above $100: WTI oil climbs on renewed supply disruption concerns

$100 has been breached by WTI oil. Prices are 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 US and Israeli plans for further coordinated strikes on Iran.

$100 per barrel has been surpassed by West Texas Intermediate (WTI) on Friday. The US benchmark is extending its rally and remains on course to gain more than 10% over the past three weeks. Supporting the advance are reports of more incidents this week involving vessels trying to transit the strategically important Strait of Hormuz, alongside renewed attacks on Saudi oilfields by the Iran-backed Houthis.

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As Iranian forces strengthen their control over the vital Strait of Hormuz shipping corridor, the risk of disrupted supplies from Gulf countries has returned to focus. According to the Iranian Islamic Revolutionary Guard Corps (IRGC) navy, another four tankers were struck during “illegal” oil transfers. A further three hit mines while trying to pass through the waterway.

Eighth month approaches with no end visible to Middle East conflict

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

With no clear resolution in sight, the conflict pitting the US and Israel against Iran is nearing its eighth month. Citing US officials, the New York Times reported on Thursday that the US and Israel might be preparing a fresh round of coordinated strikes after 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 spread the conflict across the region and place further pressure on crude oil flows.

WTI Oil: Key Questions

WTI oil explained

Traded in international markets, WTI is a crude oil grade whose name stands for West Texas Intermediate. Alongside Brent and Dubai Crude, it is one of three major grades. Its relatively low gravity earns it the description “light”, while its low sulphur content makes it “sweet”. This high-quality oil is regarded as easy to refine. Produced in the United States, it is distributed through the Cushing hub, known as “The Pipeline Crossroads of the World”. WTI serves as an oil market benchmark, with its price regularly cited by the media.

Key drivers of WTI oil prices

Supply and demand underpin WTI oil prices, as they do those of other assets. Stronger global growth can lift demand, while weaker growth can have the reverse effect. Supply disruptions caused by political instability, war or sanctions can affect prices. Decisions by OPEC, the group of major oil-producing countries, are also an important influence. Another factor is the US Dollar: because oil is traded mainly in US Dollars, a weaker currency can make it more affordable, while a stronger one can have the opposite effect.

Inventory data and its impact on WTI oil

WTI oil prices respond to weekly inventory releases from the American Petroleum Institute (API) and the Energy Information Agency (EIA). Shifts in stock levels reflect changes in supply and demand. A decline can signal stronger demand and lift oil prices; an increase can point to greater supply and weigh on prices. Every Tuesday brings the API report, followed by the EIA release the next day. The two sets of figures generally align, coming within 1% of each other 75% of the time. 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 nations of OPEC (Organization of the Petroleum Exporting Countries) jointly set production quotas for their members. These decisions frequently influence WTI oil prices. Lower quotas can restrict supply and lift prices, while increased production has the reverse effect. The broader OPEC+ grouping adds ten non-OPEC members, with Russia the most prominent.