Select Language

Oil Price Forecast: WTI eases as markets eye Israel-Iran conflict, hopes for de-escalation

Breaking news

Oil Price Forecast: WTI eases as markets eye Israel-Iran conflict, hopes for de-escalation

  • X
  • facebook
  • LINE
  • RSS

  • X
  • facebook
  • LINE
  • RSS
update 2025.06.16 23:24
Oil Price Forecast: WTI eases as markets eye Israel-Iran conflict, hopes for de-escalation

update 2025.06.16 23:24

  • West Texas Intermediate (WTI) is heading lower on Monday after a nearly 6% rally on Friday. 
  • The Israel-Iran conflict places the Strait of Hormuz at risk, raising concerns over potential supply disruptions.
  • WTI breaks $70.00 support level as Iran seeks assurances of US non-intervention before proceeding with nuclear talks.

WTI Oil prices are easing on Monday, retracing part of Friday's nearly 6% surge after slipping from the key $70 level, now holding as resistance. 

Traders remain on edge over escalating Israel-Iran tensions, most recently encapsulated by US President Donald Trump's comments outside the White House on Monday. 

According to Reuters, Trump said that he "hopes Israel and Iran can broker a deal," yet conceded that "sometimes they have to fight it out." Such mixed signals of potential de-escalation alongside outright conflict keep the crude risk premium elevated.

Meanwhile, the Wall Street Journal (WSJ) reported that Iran has used intermediaries in Arab capitals to convey messages that it seeks to avoid direct US military involvement while negotiating a pause or de-escalation. An Arab official said that "The Iranians know the US is supporting Israel in its defense, and they are sure the U.S. is supporting Israel logistically," But they want guarantees the US won't join the attacks."

In response, Oil has moved below $70.00, which now provides resistance for the near-term move.

However, if there is no deal and the conflict persists, additional risks remain, primarily those associated with the Strait of Hormuz. 

As illustrated in the chart below, this is a critical chokepoint through which about 18-19 million barrels per day, or roughly 20% of global oil consumption, passes.

The Strait of Hormuz is a slim waterway wedged between Iran's southern coast and Oman's Musandam peninsula, serving as the lone sea exit for Persian Gulf oilfields into the Arabian Sea. 

Because it narrows to barely 20-30 miles across with only two designated tanker lanes, and because there is no fully equivalent shipping alternative, any military flare-up or threat of closure there immediately chokes off a fifth of the world's oil trade. That instant squeeze on supply drives up tanker rates and insurance premiums and, in turn, pushes benchmarks like WTI sharply higher.

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.

As shown in the chart below, published by the US Energy Information Administration, approximately 20.9 million barrels per day, roughly 20% of global petroleum-liquids consumption and over 25% of seaborne-traded crude, was shipped through this corridor in 2023. 


Because there is no fully equivalent shipping alternative and only limited bypass capacity via pipelines in Saudi Arabia and the United Arab Emirates (UAE), any military flare-up, blockade, or threat of closure instantly tightens global supply, pushes tanker freight and insurance rates higher, and can spark a rapid surge in WTI prices.



Date

Created

 : 2025.06.16

Update

Last updated

 : 2025.06.16

Related articles


Show more

FXStreet

Financial media

arrow
FXStreet

FXStreet is a forex information website, delivering market analysis and news articles 24/7.
It features a number of articles contributed by well-known analysts, in addition to the ones by its editorial team.
Founded in 2000 by Francesc Riverola, a Spanish economist, it has grown to become a world-renowned information website.

Was this article helpful?

We hope you find this article useful. Any comments or suggestions will be greatly appreciated.  
We are also looking for writers with extensive experience in forex and crypto to join us.

please contact us at [email protected].

Thank you for your feedback.
Thank you for your feedback.

Most viewed

Gold Price Forecast: XAU/USD is testing trendline resistance at $3,325

Gold (XAU/USD) found buyers right below the $3,300 level on Wednesday to regain some of the ground lost over the previous days.
New
update2025.07.10 20:00

AUD/USD jumps to near 0.6570 as RBA needs confidence over inflation cooling down

The AUD/USD climbs to near 0.6570 during the European trading session on Thursday.
New
update2025.07.10 19:45

USD/CNH: Chance of edging lower and testing 7.1720 - UOB Group

Softening underlying tone may lead to US Dollar (USD) edging lower and testing 7.1720 against Chinese Yuan (CNH). In the longer run, increasing momentum suggests USD may rise, but it is too early to expect 7.2000 to come into view, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
New
update2025.07.10 19:13

USD/CAD eases from 1.3700 Fed cuts hopes, higher Oil prices

The US Dollar retreated from two-week highs above 1.3700 on Wednesday, following the release of the FOMC m¡inutes and weighed by falling US Treasury yields.
New
update2025.07.10 19:07

Rising JGB yields keep Yen under pressure - BBH

USD/JPY eased off from this week's high above 147.00, while JPY continues to underperform against most major currencies, BBH FX analysts report.
New
update2025.07.10 19:03

USD/JPY: Scope to extend to 145.60 before stabilisation - UOB Group

Pullback in US Dollar (USD) has scope to extend to 145.60 before stabilisation is likely against Japanese Yen (JPY); strong support at 145.20 is unlikely to come under threat.
New
update2025.07.10 19:00

MXN: Inflation figures bring no relief - Commerzbank

Yesterday's Mexican inflation figures offered little relief: the seasonally adjusted core rate remained roughly consistent with the previous two months, Commerzbank's FX analyst Michael Pfister notes.
New
update2025.07.10 18:56

USD/JPY consolidates around 146.30 as investors seek current status of US-Japan trade talks

The USD/JPY pair trades sideways around 146.30 during the European trading session on Thursday. The pair consolidates as investors await fresh news regarding trade talks between the United States (US) and Japan.
New
update2025.07.10 18:54

NZD/USD: Price action indicates that further NZD weakness is likely - UOB Group

New Zealand Dollar (NZD) is expected to trade in a range against US Dollar (USD), most likely between 0.5980 and 0.6020. In the longer run, price action indicates that further NZD weakness is likely; the level to watch is 0.5950, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
New
update2025.07.10 18:43

RUB: Sanctions threat returns - Commerzbank

The likelihood of new, harsh sanctions on Russia is rising again: western leaders are abandoning hopes of meaningful diplomacy and reverting back to economic pressure, which had been the consensus strategy until US President Donald Trump took over.
New
update2025.07.10 18:33

Disclaimer:arw

All information and content provided on this website is provided for informational purposes only and is not intended to solicit any investment. Although all efforts are made in order to ensure that the information is correct, no guarantee is provided for the accuracy of any content on this website. Any decision made shall be the responsibility of the investor and Myforex does not take any responsibility whatsoever regarding the use of any information provided herein.

The content provided on this website belongs to Myforex and, where stated, the relevant licensors. All rights are reserved by Myforex and the relevant licensors, and no content of this website, whether in full or in part, shall be copied or displayed elsewhere without the explicit written permission of the relevant copyright holder. If you wish to use any part of the content provided on this website, please ensure that you contact Myforex.

  • Facebook
  • Twitter
  • LINE

Myforex uses cookies to improve the convenience and functionality of this website. This website may include cookies not only by us but also by third parties (advertisers, log analysts, etc.) for the purpose of tracking the activities of users. Cookie policy

I agree
share
Share
Cancel