Trading at ~$71.37, WTI has fallen by over 2.30% in today’s session, undoing previous gains made in the Asian session.
Read more: Asia mid-session: Oil extends gains, Asian equities recovered, and Gold retreated
WTI (WTICOUSD): Key Takeaways
- Rallying to 5-month highs of ~$76.29 on Friday, WTI has retraced in today’s session, but still remains on pace for its best monthly performance since February 2021
- Owing to the escalating conflict between Israel and Iran, fears of supply disruption surrounding the conflict have boosted crude oil pricing, with recent developments suggesting President Trump will help broker a deal between the two nations
- Following the initial surge in pricing, comparative easing of geopolitical tensions in the Middle East has allowed crude oil pricing to fall, most notably in the Strait of Hormuz, which remains business as usual
WTI (WTICOUSD): Geopolitical tensions boost supply risk premium, crude oil rallies
Rallying more than 10% on Friday, news of Israeli airstrikes on Iranian nuclear facilities, and subsequent retaliation, remains the most significant and immediate driver of crude oil pricing.
With the Middle East renowned for both global oil production and transit, recent conflict poses a significant risk to international supply, with at least one outcome being a sharp rally in oil prices.
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WTICOUSD,OANDA,TradingView, 16/06/2025
While market speculation and general uncertainty ran wild late last week, recent developments, courtesy of 47th US President Donald Trump, would suggest some potential for a de-escalation in tensions.
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@realDonalTrump, TruthSocial, 13/06/2025
Making reference to previous successes in brokering deals, albeit self-proclaimed, via a TruthSocial post, a general air of comparative optimism surrounds current conflicts, with oil pricing cooling from highs in today’s session.
Trump also commented further over the weekend, encouraging negotiations between the two nations.
With the recent rally underpinned by a risk to supply, a key development is that the Strait of Hormuz, part of Iran’s territorial waters, remains open as usual, helping pacify market fears. Some worry it could be obstructed, or even completely closed, amid an escalation in the current conflict.
In somewhat typical market fashion, geopolitical factors often introduce immediate volatility, but sustained price levels, either higher or lower, require actual change to market fundamentals to stick the landing.
Either way, the next few days remain crucial for ongoing negotiations and by extension, crude oil pricing.
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