WTI rises to near $69.00 as US President Donald Trump threatens tariffs on countries buying Venezuelan crude
- WTI price drifts higher to near $69.00 in Tuesday’s early Asian session.
- Trump said he will impose secondary tariffs on Venezuela's oil and gas.
- Hopes for a ceasefire in Ukraine might cap the upside for the WTI.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $69.00 during the early Asian session on Tuesday. The WTI price edges higher to a three-week high as US President Donald Trump said he will impose tariffs on countries that buy oil and gas from Venezuela.
Late Monday, Trump said that he would be placing a 25% tariff on all imports from any country that buys oil or gas from Venezuela, effective April 2, as well as imposing new tariffs on the South American country itself.
The Treasury Department extended Chevron Corp.'s agreement to produce and export Venezuelan oil until May 27. The extension, known as a general license, exempts the country from economic sanctions and allows it to continue to pump oil.
Rising geopolitical tensions in the Middle East, which could lead to disruption of crude supplies from the region, provide some support to the WTI price. Israel continues to carry out airstrikes in Gaza, ending a nearly two-month ceasefire with Hamas. Israeli Prime Minister Benjamin Netanyahu vowed to act "with increasing military strength" to free hostages and disarm Hamas.
However, hopes for a positive outcome from the Russia-Ukraine peace talks could weigh on the black gold. US and Russian officials were in Saudi Arabia on Monday for talks over a broad ceasefire in Ukraine, with Washington also targeting a separate Black Sea maritime ceasefire deal while a wider agreement is thrashed out.
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.