WTI falls to near $62.50 due to potential Iranian crude, OPEC+ production increase
- WTI price declines as progress in US-Iran nuclear talks raises the possibility of Iranian crude returning to the market.
- The potential for OPEC+ to increase production for a second consecutive month is adding further pressure on Oil prices.
- Oil sentiment may also be weighed down by signs of slowing demand from China.
West Texas Intermediate (WTI) Oil price is trading lower at around $62.70 per barrel during the European hours on Monday. Crude Oil prices continue to decline as progress in US-Iran nuclear talks raises the prospect of Iranian crude re-entering the market. Furthermore, expectations that Organization of the Petroleum Exporting Countries and its allies, OPEC+, could increase production for a second consecutive month have put additional pressure on Oil prices.
However, WTI prices could see some recovery, driven by hopes of easing US-China trade tensions. On Friday, China announced an exemption for certain US imports from its steep 125% tariffs, sparking optimism that the protracted trade dispute between the two largest economies might be nearing a resolution.
Additionally, US Agriculture Secretary Brooke Rollins mentioned on Sunday that the Trump administration is in daily discussions with China about tariffs. Rollins also noted that negotiations with other trade partners are progressing, with several trade deals "very close" to being finalized. In contrast, US Treasury Secretary Scott Bessent did not support Trump's claim of ongoing China talks, while Beijing denied any discussions were taking place.
Despite these developments, sentiment could be dampened by signs of slowing demand from China. Reports suggest that some Chinese manufacturers are suspending production and seeking alternative markets due to US tariffs, which is leading to fewer orders and impacting employment. Although not widespread yet, these disruptions could ultimately hurt Oil demand, as China remains the largest importer of Oil.
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.