WTI Prices Expected to Pull Back After July Surge

West Texas Intermediate (WTI) crude prices have staged a significant rebound since early July, rising by over 20% to test the US$68 per barrel level on July 2.

The recovery was fueled by several factors, including the initial removal of geopolitical risk premiums following a de-escalation in the conflict between the US and Iran.

However, disputes over commercial shipping in the Strait of Hormuz led to a breakdown in diplomacy and the collapse of the memorandum of understanding (MOU) on July 7.

The subsequent renewed US airstrikes on Iranian infrastructure and Iranian retaliation against US bases in neighboring Gulf states led traders to reprice the geopolitical risk premium into the oil market.