WTI US Oil rebounds toward $97 as US-Iran conflict escalates

WTI US Oil prices climbed to around $97.00 per barrel on Thursday, marking a 2.93% increase from the previous day. The surge in oil prices is attributed to the escalating conflict between the United States and Iran, which has heightened concerns about potential disruptions to energy supplies from the Middle East. Tensions between the nations have intensified over the past week following a period of relative calm.

An Iranian official recently stated that the Islamic Republic is prepared for a more aggressive war, vowing to intensify counterstrikes if the US continues attacking its territory and infrastructure. Iran has recently launched attacks on 10 ships near the Strait of Hormuz following the US sinking of five Iranian oil tankers, marking the largest wave of attacks on shipping in the region since the conflict began six months ago.

The Strait of Hormuz is a vital route for Middle Eastern energy exports, making the market highly sensitive to any threat that could reduce oil flows through the area. Additionally, Iran-backed Houthi militants have targeted several energy facilities in Saudi Arabia, prompting temporary suspensions of operations. President Donald Trump has expressed his expectation that the conflict will persist beyond the November midterm elections and cautioned that significant relief in gasoline prices is unlikely until then.

These remarks indicate that geopolitical tensions may continue to support oil prices in the short term. On the domestic front, US crude oil inventories decreased by 300,000 barrels in the week ending September 4, according to the American Petroleum Institute (API). However, the decrease was smaller than the 1.3 million barrel decline anticipated by the market and the 2.6 million barrel drop observed in the prior week.

Investors are now eagerly awaiting official inventory figures from the Energy Information Administration (EIA), which are set to be released later on Thursday. A more substantial-than-expected drop in US stockpiles could further bolster WTI US Oil prices. WTI Oil is a type of crude oil traded on international markets, also known as West Texas Intermediate.

It is considered a high-quality oil with low gravity and sulfur content, making it easily refined. The price of WTI Oil is influenced by the fundamental factors of supply and demand. Global economic growth, political instability, wars, sanctions, and decisions made by OPEC, a group of major oil-producing countries, all play significant roles in determining oil prices.

The value of the US Dollar also impacts WTI Crude Oil prices, as Oil is primarily traded in US Dollars. Therefore, a weaker US Dollar makes Oil more affordable, and vice versa. The API and EIA publish weekly inventory reports, which affect the price of WTI Oil. A decline in inventory data may indicate increased demand, driving up oil prices, while higher inventories could reflect increased supply and push prices down.

The EIA data is generally considered more reliable due to its government agency status. OPEC, the Organization of the Petroleum Exporting Countries, is a coalition of 12 oil-producing nations that collectively determine production quotas for member countries at twice-yearly meetings. Their decisions often have a substantial impact on WTI Oil prices.

When OPEC reduces quotas, supply tightens, leading to higher oil prices. Conversely, increasing production has the opposite effect. OPEC+ refers to an expanded group that includes ten additional non-OPEC members, with Russia being the most notable. Market analyst Ghiles Guezout, with expertise in stock market investments, trading, and cryptocurrencies, employs both fundamental and technical analysis to identify market opportunities.

AUD/USD prices have been consolidating above 0.7200 during the Asian session on Thursday due to mixed cues, while hawkish Federal Reserve rate hike expectations and escalating US-Iran tensions provide some support for the US Dollar. USD/JPY has stabilized above 153.50 but remains near a seven-month low due to hawkish Bank of Japan rate reassessment continuing to support the Japanese Yen.

Gold has declined early in the American session but is holding within familiar levels as investors await further clues on US monetary policy. Upcoming economic releases, including the August US Producer Price Index report and the US Consumer Price Index due on Friday, are expected to shape market sentiment ahead of the Federal Reserve's monetary policy announcement next week.