- WTI rises amid fresh Iran-related sanctions targeting an independent Chinese refiner.
- Oil prices could gain further support as OPEC+ rolls out a new production cut plan for seven member nations.
- Geopolitical risk premiums on Oil increase as Israel launches a new ground operation in Gaza.
West Texas Intermediate (WTI) Oil price holds ground for the third successive session, trading around $68.40 per barrel during Asian hours on Friday. Oil prices remain on track for their second consecutive weekly increase, driven by new United States (US) sanctions on Iran.
On Thursday, the US Treasury imposed fresh Iran-related sanctions, targeting an independent Chinese refiner along with other entities and vessels involved in supplying Iranian crude Oil to China. Analysts at ANZ Bank, cited by Reuters, anticipate a reduction of 1 million barrels per day (bpd) in Iranian crude exports due to tighter sanctions. Meanwhile, vessel tracking service Kpler estimated Iran’s crude exports exceeded 1.8 million bpd in February but warned that sanctions could obscure actual figures.
Additionally, Oil prices may find further support as OPEC+, the Organization of the Petroleum Exporting Countries, and its allies, implements a new plan for seven member nations to cut production, reducing output by 189,000–435,000 bpd each month until June 2026. While Kazakhstan, Iraq, and Russia are expected to contribute to these reductions, increased production plans for next year could offset the impact.
Earlier this month, OPEC+ confirmed that eight of its members would increase output by 138,000 bpd per month starting in April. This move reverses part of the 5.85 million bpd in production cuts that have been gradually implemented since 2022 to stabilize the market.
Oil prices also remain supported by geopolitical risk premiums. Israel has launched a new ground operation in Gaza, while the US continues airstrikes against Iran-backed Houthi rebels in Yemen. Meanwhile, Russia’s Foreign Ministry spokeswoman, Maria Zakharova, stated that Ukraine had violated a proposed ceasefire on energy infrastructure by attacking a Russian Oil depot.
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.
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