Oil prices fell as the increase in US crude oil inventories overshadowed concerns about Kazakhstan's supply and the threat of tariffs from Greenland
On Wednesday, oil prices fell as an expected increase in US crude inventories overshadowed geopolitical pressure stemming from a temporary 7-10 day production halt at two major fields in Kazakhstan and US tariff threats related to its attempt to control Greenland.
Another factor is that the US-Iran risks remain high.
Brent futures fell 76 cents, or 1.2%, to $64.16 a barrel at 04:45 GMT. WTI crude oil contracts traded down 60 cents, or 1%, at $59.76 a barrel.
Both contracts closed up about $1 a barrel, or 1.5%, in the previous session after OPEC+ member Kazakhstan halted production at its Tengiz and Korolev oil fields on Sunday due to electricity distribution problems.
Strong Chinese economic data also had a positive impact.
The halt in oil production at Tengiz and Korolev, one of the world's largest oil fields, is temporary, and downward pressure will continue from geopolitical tensions, as well as the expected increase in US crude oil inventories.
Trump's threat to impose new tariffs on European countries if a deal isn't reached for the US to settle Greenland is putting pressure on oil markets due to the risk of tariffs slowing economic growth.
A preliminary poll published predicted that US crude oil and gasoline inventories increased last week, while distillate fuel inventories were likely to decrease.
Analysts estimated that crude oil inventories increased by an average of 1.7 million barrels in the week ending January 16.
The American Petroleum Institute (API) weekly inventory data will be released on Wednesday at 9:30 PM GMT, and the Energy Information Administration (EIA), the statistical arm of the U.S. Department of Energy, will release data on Thursday at 5:00 PM GMT. Both datasets will be released a day later due to the U.S. public holiday on Monday.
While this increase in inventories is negative for oil prices, the potential for renewed escalation of U.S.-Iran tensions could help boost oil prices.
Trump threatened to attack Iran earlier this month due to the violent crackdown on anti-government protests.
According to the Iranian Students News Agency on Tuesday, citing the Iranian National Security Parliamentary Commission, any attack on Supreme Leader Ayatollah Ali Khamenei would constitute a declaration of jihad or holy war.
While the U.S. is avoiding an immediate attack on Iran, tensions are likely to remain high due to the deployment of additional U.S. military presence in the Middle East and the lack of progress in diplomatic efforts to de-escalate the situation.
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