US President Donald Trump said that the latest US strikes on Iran were being carried out in honour of US service members killed in recent days, the Guardian reported on Monday.
“We hit them very hard again tonight, and we did that in honour of the probably three, it’s probably three great patriots,” said Trump.
The UK Maritime Trade Operations (UKMTO) agency stated early Monday that a vessel was on fire off the coast of Oman. The statement said, “UKMTO has received a report of an incident 8NM northwest of Kumzar, Oman. UKMTO has received information from a verified source that a vessel is on fire.”
Iran’s Islamic Revolutionary Guard Corps (IRGC) said that two oil tankers were blown up after attempting to transit the southern route of the Strait of Hormuz. The Iranian military stated that the critical waterway will not be safe for petrochemical products or ‘single drop of oil and gas’ transit as long as US actions in the region continue.
Early Monday, Iranian media reported on US attacks on the Iranian city of Tabriz. Multiple explosions were also reported in southwestern Bandar Mahshahr and Bandar Imam Khomeini. Mehr news agency said there are several explosions heard in southeastern Chabahar.
Market reaction
Crude oil prices attract some buyers following these headlines. At the time of writing, the West Texas Intermediate (WTI) is up 2.12% on the day at $83.50.
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.
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