WTI Oil climbs beyond $99 amid threat of further complications in the Middle East war

A 1.9% rebound takes WTI Oil above $99.00 to session highs on Thursday.
Crude prices have gained as fresh attacks on Saudi oilfields fuel fears of another escalation in the conflict.
Last week’s fall in US Crude Oil inventories far exceeded expectations, according to EIA figures released on Wednesday.

Renewed fears of supply constraints drove a sharp recovery in oil prices on Thursday as the outlook for the Middle East conflict darkened. Trading above $99,00, US benchmark West Texas Intermediate (WTI) Oil has gained about 1.9% so far on the day. The advance comes amid fresh Iranian threats against the US military and speculation over Israel’s possible return to the conflict.

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Earlier on Thursday, the navy of the Iranian Islamic Revolutionary Guard Corps (IRGC) said US bases in the region could face attacks if Washington continued to insist on sending vessels through the Strait of Hormuz along routes deemed illegal.

According to the IRGC, its forces also struck four vessels engaged in illegal oil transfers in the Persian Gulf. Another three vessels, it said, hit sea mines while trying to pass through the Hormuz sea corridor.

Can Saudi oilfields escape further attacks?

The remarks came after a fresh drone strike on Aramco’s Shaybah Oilfield by the Yemeni Houthi militias, a close ally of Tehran. The attack reportedly killed two people, reviving fears of disruptions to Saudi oil supplies.

Adding to the concerns, The New York Times reported, citing US officials, that the US and Israel might be preparing another round of major airstrikes against Iran after the US mid-term elections. The strikes would aim to compel Tehran to offer concessions in negotiations.

Further support for prices came from Wednesday’s US Energy Information Administration (EIA) release, which put the fall in commercial oil inventories at 3.1 million barrels for the week ending 16 October. The decline was substantially larger than the 800K barrel drawdown market analysts had forecast.

WTI Oil: Frequently Asked Questions

What defines WTI Oil?

Among the crude oil varieties traded internationally, WTI, short for 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 accounts for the term “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 in media reports.

Which factors determine WTI Oil prices?

Supply and demand underpin WTI Oil prices, as they do those of other assets. Stronger global growth can lift demand, whereas weaker growth can have the reverse effect. On the supply side, political instability, wars and sanctions can cause disruptions that affect prices. Production decisions by OPEC, a group of major oil-producing countries, are another important influence. Since oil is traded mainly in US Dollars, the value of the US Dollar also matters: a weaker dollar can make WTI Crude Oil more affordable, while a stronger dollar 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 movements reflect shifts in supply and demand. Falling inventories can signal stronger demand and lift oil prices; rising stocks 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 figures are generally similar, coming within 1% of one another 75% of the time. As the EIA is a government agency, its data is regarded as more reliable.

How do OPEC decisions affect WTI Oil prices?

At meetings held twice a year, the 12 oil-producing nations that make up OPEC (Organization of the Petroleum Exporting Countries) jointly set production quotas for member countries. These decisions frequently influence WTI Oil prices. Lower quotas can restrict supply and lift oil prices, while increased production has the reverse effect. The broader OPEC+ grouping includes ten additional non-OPEC members, with Russia the most notable among them.