Escalating Geopolitical Tensions in the Middle East Support WTI Oil Price
West Texas Intermediate (WTI) Oil price continues to rise for the fourth consecutive day, holding firm with strong weekly gains, trading around $73.50 per barrel during Friday’s Asian session. Crude Oil prices are supported by escalating geopolitical tensions in the Middle East, raising concerns about potential disruptions in crude supply from the region, which accounts for roughly one-third of the global Oil supply.
Key Developments:
- US President Joe Biden’s Statement: President Biden stated that the United States is in discussions with Israel about potential strikes on Iran’s Oil infrastructure.
- Potential OPEC+ Response: OPEC+ has sufficient spare Oil capacity to offset a complete loss of Iranian supply if Israel were to target Iran’s facilities.
Israeli Prime Minister Benjamin Netanyahu warned that Iran “will pay a heavy price” for Tuesday’s attack, which involved the firing of at least 180 ballistic missiles at Israel. However, OPEC+ could face challenges if Iran retaliates by attacking the Oil installations of its Gulf neighbors.
OPEC+ Spare Oil Capacity:
- OPEC+ production cuts amount to 5.86 million barrels per day (bpd).
- Saudi Arabia can increase output by 3.0 million bpd, while the UAE can boost production by 1.4 million bpd.
Moreover, Libya’s decision to reopen all oilfields and export terminals following a leadership dispute resolution has positively impacted global Oil production levels, according to Reuters.
WTI Oil FAQs
What is WTI Oil?
WTI Oil is a type of Crude Oil sold on international markets. It is sourced in the United States and distributed via the Cushing hub. WTI is considered a high-quality Oil that is easily refined and serves as a benchmark for the Oil market.
Factors Affecting WTI Oil Price:
- Supply and demand dynamics
- Global economic growth
- Political instability and conflicts
- OPEC decisions
- Value of the US Dollar
Impact of Weekly Oil Inventory Reports:
The weekly reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) reflect changes in inventories, influencing WTI Oil price. API’s report is published every Tuesday, followed by EIA’s report. EIA’s data is considered more reliable as a government agency.
Role of OPEC in WTI Oil Price:
OPEC’s decisions on production quotas impact WTI Oil prices. Lower quotas tighten supply, pushing up prices, while increased production has the opposite effect. OPEC+ includes additional non-OPEC members like Russia.