WTI drifts higher to $73 on rising Israel-Iran tension

West Texas Intermediate (WTI) is trading around $73.00 during Asian trading hours on Thursday. The US crude oil benchmark’s price edges higher amid fears that the Israel-Iran crisis could spiral into a broader conflict involving the United States.

US President Trump said late Tuesday that he approved of attack plans for Iran, but held them to see if Tehran would abandon its nuclear programme, according to the Wall Street Journal.

Trump emphasised his insistence on Iran’s unconditional surrender, but Iranian Supreme Leader Ayatollah Ali Khamenei rejected the US demand. Analysts said direct US involvement would widen the conflict, putting energy infrastructure in the region at higher risk of attack. This, in turn, could boost the WTI price in the near term.

US Crude Inventories posted a massive draw last week. The US Energy Information Administration (EIA) weekly report showed crude oil stockpiles in the US for the week ending June 13 fell sharply by 11.473 mln barrels, compared to a decline of 3.644 mln barrels in the previous week. The market consensus estimated that stocks would decrease by 2.3 mln barrels.

Nonetheless, the expectations of lower demand might cap the upside for the WTI.

In its monthly oil report on Tuesday, the International Energy Agency (EIA) revised its world oil demand estimate downwards by 20,000 barrels per day from last month’s forecast and increased the supply estimate by 200,000 bpd to 1.8 mln bpd.

(Source: OANDA)