WTI remains capped below $71.00 as Trump’s tariffs loom
- WTI price drifts higher to near $70.95 in Wednesday’s early Asian session.
- Trump threatened Russia with oil tariffs if Moscow tried to block efforts to end the war in Ukraine.
- Crude oil stockpiles in the US climbed by 6.037 million barrels last week, according to the API.
West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $70.95 during the early Asian session on Tuesday. The WTI price edges higher amid supply worries after US President Donald Trump threatened Russia with oil tariffs. However, the upside for the black gold might be limited as traders braced for reciprocal tariffs that Trump is set to announce on Wednesday.
Trump said on Sunday that he was "pissed off" at Russian President Vladimir Putin and would impose secondary tariffs of 25% to 50% on buyers of Russian oil if he feels Moscow is blocking his efforts to end the war in Ukraine. Trump also threatened Iran over the weekend with bombing and secondary tariffs if Tehran did not come to an agreement with Washington over its nuclear program. The rising geopolitical risks could disrupt global supply, which could lift the WTI price.
On the other hand, the WTI price would remain under pressure due to Trump’s auto and reciprocal tariffs. Trump said that he will impose “reciprocal tariffs” on Wednesday, suggesting that many countries with their own duties on US goods could suddenly face new trade barriers. The White House provided no details about the size and scope of tariffs that it confirmed Trump will impose later in the day.
The American Petroleum Institute (API) weekly report showed crude oil stockpiles in the United States for the week ending March 28 rose by 6.037 million barrels, compared to a decrease of 4.6 million barrels in the previous week. So far this year, crude oil inventories have climbed nearly 23 million barrels, according to Oil price calculations of API data.
Oil traders will monitor the OPEC+ ministerial committee meeting on Saturday to review policy. According to Reuters sources, OPEC+ plans to increase output by 135,000 barrels per day in May. OPEC+ agreed to a similar increase in output for April.
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.