The price of West Texas Intermediate (WTI) Oil went up after news of possible Israeli strikes on Iranian nuclear sites. This raised worries about the oil supply from the Middle East. As a result, WTI is now trading around $62.70 per barrel. Any conflict could disrupt the oil flow through the Strait of Hormuz, impacting exports from Gulf nations like Saudi Arabia and the UAE. The American Petroleum Institute (API) reported an increase of 2.49 million barrels last week, which was unexpected as analysts predicted a decrease of 1.85 million barrels. This rise in US crude supply may limit further price increases. Meanwhile, Kazakhstan’s oil production increased by 2% in May, going against OPEC+ quotas.

Factors Influencing WTI Oil

WTI Oil is a key benchmark, sourced mainly in the US, and is influenced by supply and demand, geopolitical issues, OPEC decisions, and the US Dollar’s value. Weekly inventory data from the API and EIA greatly affects oil prices; lower inventories typically indicate higher demand. OPEC’s production choices significantly impact WTI prices. Lower quotas usually lead to higher prices, and vice versa. OPEC+ includes Russia and other members, which can also affect production. With WTI prices rising lately, we see geopolitical risk pushing prices up, especially with increasing tensions between Israel and Iran. The market reacted quickly, with WTI surpassing $62.70 per barrel, anticipating possible supply disruptions. The Strait of Hormuz is a crucial passage for energy exports, especially for Saudi Arabia and the UAE, with around 20% of the world’s oil supply passing through it. Thus, even rumors of conflict can raise concerns about supply availability. For those trading in oil derivatives, this creates a heightened sensitivity to military events, where even unofficial statements can rapidly shift prices. Despite these pressures, the API’s recent report indicates US inventories increased by 2.49 million barrels, countering the expected decrease of 1.85 million barrels. Such surprises can help prevent drastic price increases, suggesting that short-term supply issues may not be as severe as feared. Traders should be cautious about overreacting to any single headline.

OPEC+ And Market Sensitivity

Kazakhstan’s oil production rose by 2% in May, showing that not all producers stick to OPEC+ agreements. Non-compliance by participating countries adds uncertainty to expected output. This highlights the need to consider actual production numbers, not just quotas. WTI oil is influenced by more than just Middle Eastern politics. The price is also linked to the strength of the US Dollar and domestic production. A stronger Dollar can make commodities pricier for other currency holders, which may reduce international demand. We rely heavily on inventory reports from the EIA, particularly after the API releases, as reliable short-term indicators. The production behavior of OPEC+ continues to heavily influence long-term market trends. While their meetings can cause volatility, real production outcomes in places like Russia and Iraq often matter more than official announcements. There is a pattern of quotas not being met, and the markets are taking notice. We are closely monitoring this divergence, especially regarding countries that pursue their own strategic interests regardless of production goals. The short-term risk outlook is mixed. Unexpected geopolitical events are driving speculative interest, while rising inventories and excess production could keep prices down. From our view, it’s wise to stay flexible, especially during weekly data releases and key communications from major producers or officials. There is an opportunity in the difference between current supply signals and future contract pricing. Create your live VT Markets account and start trading now.

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