• WTI climbs to its highest level since May as escalating Middle East tensions deepen supply concerns.
  • EIA data show a modest decline in US crude inventories.
  • OPEC cuts its 2026 demand growth forecast but raises its projection for next year.

West Texas Intermediate (WTI) Oil rallies nearly 5% on Thursday, climbing to its highest level since May 21 as escalating tensions in the Middle East raise fears of further disruption to already tight supplies. At the time of writing, WTI trades around $99 and is up about 10.50% so far this week.

The advance follows a fresh escalation between the United States (US) and Iran in recent days, increasing security risks around the Strait of Hormuz, where shipping remains heavily restricted following the outbreak of the war in late February. Adding to concerns, The Wall Street Journal reported on Thursday, citing US and Middle Eastern officials, that Iran has resumed producing ballistic missiles.

Iran’s Islamic Revolutionary Guard Corps (IRGC) also claimed that the Strait of Hormuz is blocked and under its “intelligent control and information dominance.” The group warned that any hostile presence in the strategic waterway would be targeted, according to Iranian state broadcaster IRIB.

Supply concerns have also spread beyond the Strait of Hormuz after Iran-aligned Houthis seized Yemen’s port of Mocha on Thursday, increasing risks around the Red Sea and the Bab el-Mandeb Strait. However, a Houthi spokesperson said current operations are limited to specific targets and described them as defensive, adding that navigation and international trade through the two waterways remain safe and uninterrupted.

The latest Energy Information Administration (EIA) report showed that US crude Oil inventories fell by 391,000 barrels, missing expectations for a 1.6 million-barrel decline after inventories dropped by 4.45 million barrels a week earlier.

In its Short-Term Energy Outlook released on Wednesday, the EIA raised its average WTI price forecast for 2026 to $84.65 per barrel. The agency said global Oil inventories have fallen by around 400 million barrels so far this year and are expected to decline further through year-end, as significant volumes of Middle Eastern production and exports remain offline.

Meanwhile, OPEC offered a mixed demand outlook. The group lowered its forecast for global Oil demand growth in 2026 to 380,000 barrels per day from 580,000 bpd. However, it raised its 2027 growth estimate to 2.36 million bpd from 2.16 million bpd.

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.

I am a macro-focused research analyst with over four years of experience covering forex and commodities market. I enjoy breaking down complex economic trends and turning them into clear, actionable insights that help traders stay ahead of the curve.