Oil jumps 4%: Deal or bombs by Wednesday?

ARTICOLI POPOLARI

Trump tells CNBC the US military is "raring to go" with the ceasefire expiration hours away.
Iran's parliament speaker warned Tehran rejects negotiations under the shadow of threats.
West Texas Intermediate futures for May settlement briefly ripped 4% above $93 a barrel as Strait of Hormuz traffic continues to thin out.
DJIA futures reversed an overnight rally as traders brace for Wednesday's deadline.

The countdown is on. With the US-Iran ceasefire set to expire late Wednesday, Tuesday delivered dueling statements from both sides that looked more like pre-conflict posturing than pre-deal diplomacy. Oil surged, the Dow Jones Industrial Average (DJIA) gave back its overnight rally, and shipping data confirmed the Strait of Hormuz remains effectively choked.

A Trump ultimatum, not an olive branch

President Donald Trump used Tuesday's CNBC interview to tell Wall Street what it already suspected: he has no appetite for an extension. The president said time is running short, insisted the US is negotiating from strength, and pointed to a favorable agreement as the expected outcome. He also made clear the military stands ready to resume operations, describing the US posture as "raring to go." Earlier Tuesday on Truth Social, Trump accused Iran of repeatedly violating the ceasefire. Vice President JD Vance, special envoy Steve Witkoff, and Jared Kushner are expected in Islamabad for a second round of Pakistani-brokered talks, following a 21-hour session earlier this month that ended without a deal.

Tehran digs in its heels

Iran's response on Tuesday did little to soften the tone. Foreign Minister Abbas Araghchi told his Pakistani counterpart Ishaq Dar that Tehran is still weighing its options, while the Iranian Foreign Ministry pinned responsibility for the impasse on what it called provocative actions by Washington, including Sunday's seizure of the Iranian commercial ship Touska. Parliament Speaker Mohammad Bagher Ghalibaf went harder, warning on X that Trump is attempting to turn talks into a "table of surrender" and signaling Tehran is prepared to unveil fresh options on the battlefield. As of late Tuesday, Iran had yet to officially confirm a delegation for Islamabad, although Ghalibaf is reportedly expected Wednesday.

Markets stop pricing the deal

West Texas Intermediate (WTI) futures jumped 4% to trade above $93 per barrel, while Brent futures added 2% above $98, retracing the bulk of last week's slide on initial ceasefire optimism. DJIA futures, which printed an overnight high near 49,800, reversed to trade back near 49,400 as the Oil complex rallied and Treasury yields firmed. Only 16 vessels transited the Strait of Hormuz on Monday, per MarineTraffic data, underscoring that the de facto closure of a waterway normally carrying around 20% of global Oil flow remains firmly in place.

What happens if the clock runs out?

Trump has said plainly he sees little reason to grant an extension, even if Wednesday's talks make progress. Iran's public messaging suggests it will not negotiate under an active military threat. With both camps staking out maximalist positions on the airwaves, the real question is whether anything constructive can still be done behind closed doors in Islamabad. If not, the Strait of Hormuz and the Oil complex look to be the first places markets will register the fallout.

WTI 5-minute chart

WTI Oil FAQs

What is WTI Oil?

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.

What factors drive the price of WTI Oil?

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.

How does inventory data impact the price of WTI Oil

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.

How does OPEC influence the price of WTI Oil?

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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