WTI edges higher to near $86.00 on uncertainty over US-Iran talks

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WTI price drifts higher to near $86.00 in Tuesday’s Asian session.
Iran said it will not negotiate under the “shadow of threats.”
Traders will closely monitor the developments surrounding the next round of US-Iran talks.

West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $86.00 during the Asian trading hours on Tuesday. The WTI price edges higher as tensions rise between the United States (US) and Iran. Traders brace for the American Petroleum Institute (API) report, which will be published later on Tuesday.

The Guardian reported that US Vice President JD Vance is expected to fly to Islamabad at the head of a US diplomatic delegation on Tuesday if Iran agrees to further talks in the Pakistani capital as the deadline for the current ceasefire looms.

Diplomatic efforts to end the US-Israel war on Iran remain uncertain, with Iranian Parliament speaker Mohammad Bagher Ghalibaf saying Tehran will not negotiate under the “shadow of threats.” US President Donald Trump stated that the blockade on Iranian ports will remain until Tehran agrees to a deal.

"Oil markets continue to gyrate in response to oscillating social media posts by the US and Iran, rather than the realities on the ground, which remain challenging for oil flows to resume in a rapid fashion," said Saul Kavonic, analyst from financial services firm MST Marquee.

The API report will be released later on Tuesday. A larger-than-expected crude oil inventory draw indicates stronger demand and could lift the WTI price, while a bigger build than estimated signals weaker demand or excess supply, which might weigh on the WTI price.

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.