West Texas Intermediate (WTI), the US crude oil benchmark, is trading around $103.60 during the early Asian trading hours on Tuesday. The WTI price edges higher as traders are on edge ahead of US President Donald Trump's deadline to reopen the Strait of Hormuz or face major attacks on its civilian infrastructure.
Trump said on Monday that the latest proposal for a US ceasefire with Iran is “not good enough" ahead of his deadline for Iran to either reopen the Strait of Hormuz. “It’s not good enough, but it’s a very significant step,” Trump said, adding, “They’re negotiating now, and they’ve made a very significant step. We’ll see what happens.”
Trump added that Iran could be “taken out in one night” and power plants would be rendered "burning, exploding and never to be used again.” Iran has also retaliated by saying that it will respond to the US President's threats by ramping up its own attacks on energy infrastructure in the Gulf. Severe supply disruptions in the Middle East and a high geopolitical risk premium could boost the WTI price in the near term.
The Organization of the Petroleum Exporting Countries and allies (OPEC+) on Sunday agreed to increase production by 206,000 barrels per day (bpd) in May, though it is unclear how the oil will reach the global market with the Strait still closed.
Traders brace for the release of the American Petroleum Institute (API) report, which will be published later on Tuesday. A larger-than-expected crude oil inventory draw indicates stronger demand and could lift the WTI price, while a bigger build than estimated signals weaker demand or excess supply, which might weigh on the WTI price.
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