Oil prices have resumed their downtrend on Monday, as diplomatic efforts to avoid the resumption of the US-Iran hostilities intensify, which has been seen by the market as a sign that a negotiated end of the conflict is possible. The US benchmark West Texas Intermediate (WTI) Oil is nearly 3% down on the day at $87.30 at the time of writing, just above two-month lows, at $86.32 hit in early October.
Reports by Reuters affirm that the US President, Donald Trump, and Vice President JD Vance will meet Qatari Prime Minister Sheikh Mohammed bin Abdulrahman Al-Thani on Monday to discuss the latest diplomatic efforts to resume the negotiating process between the US and Iran.
Trump: Further attacks on Iran are unlikely as long as talks show progress
On Sunday, Trump contributed to ease tensions, affirming that it is highly unlikely thst the US would attack Iran while negotiations towards a peace deal show progress. The same day, Secretary of State Marco Rubio warned that he does not see an immediate breakthrough before departing for a G7 summit but added that President Trump prefers a diplomatic solution although, he said, Iran’s demands are, so far, “unacceptable”
Iranian Prime Minister Masoud Pezeshkian affirmed on Monday that the Supreme Leader Mojtaba Khamenei has issued new directives to end the state of “neither war nor peace” with the US. Iranian authorities, however, demand the end of the US naval blockade and the release of Iran’s seized assets abroad to advance towards a peace process and accused the US of defaulting on its commitments.
Meanwhile, skirmishes in the area remain, as a drone attack hit the Khor Mor garfield ion the Kurdish region of Iraq, and Iran’s state media affirmed that targets on Queshm Island, in the Strait of Hormuz, were hit by the US military on Sunday night.
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.
