WTI Oil reversal stalls above $91.00 as Middle East tensions outweigh supply increases

WTI oil prices have hovered near $91.00 following a brief surge to $96.00 earlier in the week. While hopes of a US-Iran peace deal and increased Saudi Arabian exports through the Strait of Hormuz have offered some relief, recent attacks by Iranian-backed Houthis from Yemen are keeping crude prices supported. Saudi Arabia reported record oil exports through the Strait of Hormuz, reaching a wartime peak of over 5 million barrels a day in September, up from 3.4 million in August and 4.5 million in July.

Iraq, Kuwait, and the UAE also increased their oil shipments from the Gulf using vessels with their transponders turned off, contributing to a surge in global supply and easing concerns about disruptions. Meanwhile, a new seven-day ceasefire proposal from Iran, outlining the implementation of a June Memorandum of Understanding and the reopening of the Strait of Hormuz, has given hope for a resolution to the ongoing conflict.

However, uncertainty persists due to the interception of new waves of missiles launched by the Houthis and fears that an attack could damage Saudi oilfields once again. US data showed a larger-than-expected increase in commercial oil stockpiles, with a 2.96 million barrel rise in the week ending September 19, compared to market expectations of a 700K withdrawal and a 640K decline in the previous week.

This inventory build-up has helped sustain the oil rally. WTI oil, a high-quality crude sourced in the US and distributed via the Cushing hub, is a benchmark for the oil market, with its price frequently quoted in the media. Factors such as global growth, political instability, wars, sanctions, OPEC decisions, the US Dollar value, and weekly inventory reports by the American Petroleum Institute and Energy Information Agency can impact WTI oil prices.