Oil prices moved lower on Wednesday as expectations of a build in U.S. crude stockpiles overshadowed a temporary shutdown at two major oilfields in Kazakhstan, while broader sentiment was also weighed down by geopolitical tensions stemming from U.S. tariff threats linked to Greenland.
Brent crude futures were down 97 cents, or 1.5%, at $63.95 a barrel by 07:45 GMT. U.S. West Texas Intermediate crude fell 78 cents, or 1.3%, to $59.58 a barrel.
Both benchmarks had settled nearly $1 a barrel higher in the previous session after OPEC+ producer Kazakhstan halted production at the Tengiz and Korolev oilfields on Sunday because of power distribution problems. The move, combined with upbeat economic data from China, had briefly supported prices.
According to three industry sources cited by Reuters, output at the two Kazakh fields could remain suspended for a further seven to ten days.
However, the stoppage at Tengiz — one of the world’s largest oilfields — and at Korolev is seen as temporary. IG market analyst Tony Sycamore said downward pressure from an anticipated rise in U.S. crude inventories, together with ongoing geopolitical uncertainty, is likely to persist.
Additional pressure has come from comments by U.S. President Donald Trump, who has threatened to impose fresh tariffs on European countries if no agreement is reached on U.S. control of Greenland, raising concerns that such measures could slow global economic growth. Trump reiterated on Tuesday that there was “no going back” on his objective regarding Greenland.
Market participants are also watching inventory data closely. A preliminary Reuters poll on Tuesday showed expectations that U.S. crude oil and gasoline inventories rose last week, while distillate stocks likely declined. On average, six analysts surveyed estimated crude inventories increased by around 1.7 million barrels in the week to January 16.
Weekly inventory figures from the American Petroleum Institute are due at 4:30 p.m. EST (21:30 GMT) on Wednesday, followed by official data from the Energy Information Administration at 12:00 p.m. EST (17:00 GMT) on Thursday. Both releases are delayed by a day due to a U.S. federal holiday on Monday.
While rising inventories would typically be bearish for oil prices, Gregory Brew, senior analyst at consultancy Eurasia Group, said the risk of renewed tensions between the U.S. and Iran could provide some upside support.
Trump recently threatened military action against Iran over its violent response to anti-government protests earlier this month. Iran’s national security parliamentary commission warned that any attack on Supreme Leader Ayatollah Ali Khamenei would trigger a declaration of jihad, or holy war, according to the Iranian Students’ News Agency.
“While the U.S. demurred from striking Iran immediately, tensions are likely to remain high as additional U.S. military assets move to the Middle East and diplomacy to de-escalate tensions fails to make progress,” Brew said in a note.