WTI Oil holds above $85 as optimism over a Middle East peace agreement begins to wane

WTI Oil steadies near $85.50 after gaining more than $2 from Tuesday's lows.
Crude prices find modest support as doubts deepen over the prospects for Middle East peace talks.
Oil's recovery remains constrained by an unexpected rise in US API Oil inventories in the first week of November.

Oil prices rebounded from two-month lows on Wednesday, with sentiment increasingly influenced by concerns over stalled efforts to secure a Middle East peace agreement. During the European session, the US benchmark West Texas Intermediate (WTI) Oil is consolidating near $85.50, having gained more than $2 from Tuesday’s lows.

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With each day bringing no meaningful progress in talks between Washington and Tehran, investors are losing confidence in the prospect of a peace agreement. Meanwhile, vessels seeking to pass through the Strait of Hormuz continue to face attacks.

The outlook presented by US officials remains optimistic, with the prospect of fresh attacks on Iran being played down. At a G7 meeting in Paris on Tuesday, Secretary of State Marco Rubio stated that “there is no need for major combat operations”. President Donald Trump said he was maintaining the war at “status quo”, while warning that the US military remained “locked and loaded”.

How are continued Strait of Hormuz attacks affecting Oil supply?

A fresh attack on an Oil tanker northeast of Oman’s coast was reported on Tuesday by the UK Maritime Trade Operations (UKMTO), an organisation that monitors global maritime trade. The report came shortly after US Defence Secretary Pete Hegseth said the US controlled the Strait of Hormuz. Such incidents have brought Oil traffic down to a trickle along a corridor that carried about 20% of global Oil supply before the war. Fears of supply disruption have consequently intensified, keeping prices between 20% and 60% above pre-war levels for most of the past eight months.

WTI Oil’s rebound has also been restrained by inventory figures released on Tuesday by the American Petroleum Institute (API). Crude Oil stocks rose by 9 million barrels in the week ending 6 November, rather than falling by 1 million barrels as markets had expected. The build followed a decline of 5.2 million barrels in the preceding week.

WTI Oil: key questions answered

What defines WTI Oil?

Traded internationally, WTI Oil is a variety of Crude Oil. WTI stands for West Texas Intermediate and is one of the three main types, alongside Brent and Dubai Crude. Its relatively low gravity and sulphur content earn it the descriptions “light” and “sweet”, respectively. Regarded as a high-quality Oil, it is easy to refine. Production is based in the United States, with distribution through the Cushing hub, known as “The Pipeline Crossroads of the World”. WTI serves as an Oil market benchmark, and its price features regularly in media reports.

What determines WTI Oil prices?

Supply and demand are the principal forces behind WTI Oil prices, as they are for other assets. Stronger global growth can lift demand, while weaker growth can have the reverse effect. Supply disruptions arising from political instability, wars or sanctions can also affect prices. Another major influence is OPEC, a grouping of leading Oil-producing countries whose decisions help shape prices. As Oil is traded mainly in US Dollars, the currency’s value also matters for WTI Crude Oil: a weaker US Dollar can make Oil more affordable, whereas a stronger currency 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. A fall in inventories may signal stronger demand and lift Oil prices. By contrast, an inventory build can point to greater supply and weigh on prices. The API releases its report every Tuesday, followed by the EIA the next day. The two sets of figures are generally similar, coming within 1% of each other 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. Cutting quotas can constrain supply and lift Oil prices, while increasing production has the reverse effect. The broader OPEC+ grouping includes ten additional non-OPEC members, with Russia the most notable among them.