- The fears that the US can get involved in the Middle East War are promoting the price of oil.
- Crude oil futures are in strong recovery for concerns about supply interruptions.
- Iran’s ambassador to the UN has promised a strong answer if the US is involved in the war.
The verbal escalation between the US president Donald Trump and Iranian officials has increased the fears of a broader regional war in the Middle East, with the participation of the US, which is underpinning crude oil prices near maximum of four months.
The price of the West Texas Intermediate American barrel has once again exceeded $ 73.00 during the European morning session, with Nymex crude oil futures a month reaching the level of 75.00.
The price of oil shot more than 20% in the previous two weeks, extending its recovery from the minimums of early May in 55 $ to the maximum of four months at $ 75.00. The concerns of the investors that Iran could block the crucial narrow of ormuz and carry prices well above $ 100 are underpinning the recovery of oil.
The price of oil can be seen as verbal tensions between the US and Iran intensify
The Iranian ambassador to the United Nations, warning about the consequences of a direct US intervention in the conflict, has triggered an avevers risk reaction and a rebound in oil prices.
Ali Bahraini accused the US of being an accomplice of Israel’s aggression and said that Tehran will respond “strongly, properly and appropriately” to any direct involvement of the US in the conflict.
These comments occur after Trump demanded an unconditional surrender of the Iranian government and threatened to kill his supreme leader Ali Khamenei, after hastily abandoning the G7 summit to meet with the National Security Council.
WTI FAQS oil
WTI oil is a type of crude oil that is sold in international markets. WTI are the acronym of West Texas Intermediate, one of the three main types that include the Brent and Dubai’s crude. The WTI is also known as “light” and “sweet” by its relatively low gravity and sulfur content, respectively. It is considered high quality oil that is easily refined. It is obtained in the United States and is distributed through the Cushing Center, considered “the crossing of the world.” It is a reference for the oil market and the price of WTI is frequently traded in the media.
Like all assets, supply and demand are the main factors that determine the price of WTI oil. As such, global growth can be a driver of the increase in demand and vice versa in the case of weak global growth. Political instability, wars and sanctions can alter the offer and have an impact on prices. OPEC decisions, a group of large oil -producing countries, is another key price factor. The value of the US dollar influences the price of WTI crude oil, since oil is mainly traded in US dollars, so a weaker dollar can make oil more affordable and vice versa.
Weekly reports on oil inventories published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) influence the price of WTI oil. Changes in inventories reflect the fluctuation of supply and demand. If the data show a decrease in inventories, it can indicate an increase in demand, which would raise the price of oil. An increase in inventories may reflect an increase in supply, which makes prices lower. The API report is published every Tuesday and that of the EIA the next day. Their results are usually similar, with a 1% difference between them 75% of the time. EIA data is considered more reliable, since it is a government agency.
The OPEC (Organization of Petroleum Exporting Countries) is a group of 13 nations oil producing that collectively decide the production quotas of member countries in biannual meetings. Their decisions usually influence WTI oil prices. When OPEC decides to reduce fees, it can restrict the supply and raise oil prices. When OPEC increases production, the opposite effect occurs. The OPEC+ is an expanded group that includes another ten non -members of the OPEC, among which Russia stands out.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
