Near 101.00: WTI retreats as Trump rules out immediate Iranian strikes

With immediate military strikes on Iran ruled out by US President Trump, WTI retreated.
Geopolitical risks remain high as Houthis attack Saudi targets and Iran may retaliate after the elections.
To address high diesel prices, Trump introduced costly policies that included relaxing sanctions on Russian fuel.

$101.10 was the approximate price of West Texas Intermediate (WTI) oil during Monday’s Asian session. Prices moved lower after gaining over 4% in the previous session. The decline followed US President Donald Trump’s decision to rule out immediate military action against Iran. Al Jazeera reported his statement that “there will not be a strike today,” following earlier comments that Washington might have to “finish the job” or potentially secure an agreement with Tehran. Those remarks came amid mounting Iranian and Houthi threats to American interests in the region.

TMGM Analysis: Financial Market News, Economic Calendar & Market Insights

Concerns persist, however, that attacks on Iran could restart after this week’s Israeli elections and next week’s US midterm elections. Iran is reportedly ready to respond by striking Israel and the UAE.

Regional tensions also increased after Yemen’s Houthis said on Sunday that attacks on Saudi Arabia’s King Khalid Airport in Riyadh would continue, Reuters reported. Only hours earlier, Saudi officials had announced the resumption of flights at the airport despite repeated strikes by the group.

Over the weekend, fighting continued across the region. The Houthis claimed responsibility on Saturday for strikes on the Saudi airport and oil facilities; on Sunday, Saudi Arabia said it had intercepted further missiles and drones. Also on Sunday, the leading oil exporter partially reopened its main airport after earlier Houthi attacks caused damage. The militant group nevertheless pledged to continue its offensive.

With November’s midterm elections drawing closer, President Donald Trump is turning to expensive and politically contentious policies to tackle persistently high diesel prices. His administration’s efforts to reduce costs include offering farmers billions of dollars, loosening rules for truckers, relaxing sanctions on Russian fuel and pressing European allies to release emergency oil reserves.

Oil upside bias persists as elections sustain escalation risk premium

Crude prices are likely to retain support over the coming weeks, according to TD Securities. The bank stated that “we expect crude oil will remain skewed to the upside in the near term as escalation risk ahead of Israeli elections and US midterm elections remains elevated.” In its assessment, the enduring geopolitical risk premium supports a positive outlook for oil, notwithstanding wider market uncertainty.

WTI Oil: Key Questions Answered

WTI Oil: Definition and Characteristics

Traded internationally, WTI oil takes its name from West Texas Intermediate. Alongside Brent and Dubai Crude, it is one of the three principal types of crude oil. Its relatively low gravity and sulphur content earn it the respective descriptions “light” and “sweet”. Regarded as a high-quality oil, WTI is readily refined. It originates in the United States and 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.

WTI Oil Prices: Main Drivers

Supply and demand determine WTI oil prices, as they do for other assets. Stronger global growth can lift demand, while weaker growth can have the reverse effect. Supply disruptions stemming from political instability, conflict or sanctions can also affect prices. Another major influence is the policy adopted by OPEC, a group of leading oil-producing countries. As oil is traded mainly in US Dollars, the currency’s value matters too: a weaker US Dollar can make WTI crude oil more affordable, while a stronger one can make it less affordable.

WTI Oil Prices: The Role of Inventory Data

Weekly inventory releases from the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence WTI oil prices by showing changes in the supply-demand balance. Falling inventories may signal stronger demand and lift prices. Rising stocks, by contrast, may point to greater supply and weigh on prices. The API publishes its figures every Tuesday, followed by the EIA the next day. The two sets of findings are generally close: 75% of the time, they differ by no more than 1%. As the EIA is a government agency, its figures are regarded as more reliable.

WTI Oil Prices: OPEC’s Influence

At meetings held twice a year, the 12 oil-producing countries in OPEC (Organization of the Petroleum Exporting Countries) jointly set production quotas for members. These decisions frequently affect WTI oil prices. Cutting quotas can restrict supply and lift prices; increasing output can have the reverse effect. The wider OPEC+ grouping brings in ten additional countries outside OPEC, most notably Russia.