Oil prices drifted lower on Wednesday as expectations of rising U.S. crude inventories outweighed the impact of a temporary production shutdown at two major oilfields in Kazakhstan, while broader sentiment remained fragile amid geopolitical tensions tied to U.S. tariff threats over Greenland.
Brent crude futures slipped 97 cents, or 1.5%, to $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 climbed by nearly $1 a barrel in the previous session after OPEC+ producer Kazakhstan halted output at the Tengiz and Korolev fields on Sunday due to power supply issues. That move, combined with stronger-than-expected economic data from China, had briefly lent support to prices.
According to three industry sources cited by Reuters, production at the two Kazakh fields may remain suspended for another seven to ten days.
Despite that, the disruption at Tengiz — one of the world’s largest oilfields — and at Korolev is viewed as temporary. IG market analyst Tony Sycamore said downward pressure from an anticipated build in U.S. crude stocks, alongside ongoing geopolitical uncertainty, is likely to persist.
Oil markets are also being weighed down by comments from U.S. President Donald Trump, who has warned of fresh tariffs on European countries if no agreement is reached on U.S. control of Greenland. Such measures could slow economic growth and dampen oil demand. Trump reiterated on Tuesday that there was “no going back” on his objective regarding Greenland.
Attention is now turning to inventory data. A preliminary Reuters poll showed expectations that U.S. crude and gasoline inventories rose last week, while distillate stocks likely declined. On average, six analysts forecast an increase of around 1.7 million barrels in crude inventories for the week ended January 16.
Weekly figures from the American Petroleum Institute are due later on Wednesday, followed by official data from the Energy Information Administration on Thursday. Both releases are delayed by a day because of a U.S. federal holiday earlier in the week.
While rising inventories would normally pressure oil prices, Gregory Brew, senior analyst at Eurasia Group, noted that the risk of renewed tensions between the United States and Iran could offer some upside support.
Trump has recently threatened military action against Iran over its violent crackdown on 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 Iranian state media.
“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.
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