Oil prices fell in Asian trade on Wednesday, stepping back from strong recent gains after Iraqi and Kurdish authorities agreed to resume oil exports through Turkey’s Ceyhan port.
The deal offered some relief to markets from supply disruptions caused by the U.S.-Israel war on Iran. But Brent still remained above $100 a barrel, as the war showed few signs of easing after it entered its third week.
Caution before the conclusion of a Federal Reserve meeting later in the day also weighed, with markets fearing hawkish signals amid growing concerns over sticky inflation due to oil price increases from the Iran conflict.
Brent oil futures fell 2.3% to $101.05 a barrel, while West Texas Intermediate crude futures fell 3.3% to $93.03 a barrel by 00:18 ET ET (04:18 GMT).
WTI futures logged deeper losses after data from the American Petroleum Institute showed on Tuesday evening that U.S. oil inventories grew by 6.60 million barrels in the past week, against expectations for a 0.6 mb draw.
The API data usually heralds a similar print from official U.S. inventory data, which is due later on Wednesday.
Iraq, Kurdish authorities reach deal to resume oil exports to Turkey’s Ceyhan
The Iraqi government and the Kurdistan Regional Government on Tuesday reached a deal to resume oil exports to Turkey’s Ceyhan hub from Wednesday.
The agreement comes as major oil producing nations race to find export channels outside the Strait of Hormuz, especially after Iran effectively blocked the shipping lane earlier this month.
Reports last week showed Iraq was seeking to pump at least 100,000 barrels per day of oil through the port. The country was seen taking roughly 70% of its oil production offline due to the Iran conflict.
But oil supplied through the Ceyhan hub is likely to be a fraction of the supply shortfall caused by the Hormuz closure.
UAE could aid US in Hormuz shipping, Iran hostilities persist
Oil cooled its recent gains after reports said the United Arab Emirates may join a U.S.-led effort to protect shipping in the Strait of Hormuz.
Iran effectively shut all passage through the strait– which supplies at least a fifth of the world’s oil– in retaliation for attacks by the U.S. and Israel.
The UAE may become the first country to join a U.S. call for policing the Strait of Hormuz, although most other U.S. allies had largely rejected calls from President Donald Trump for assistance in the shipping lane.
Iran ramped up its attacks on ships in and around Hormuz this week after the U.S. and Israel attacked a key Iranian export terminal. Overnight reports showed Ali Larijani, Iran’s security chief, was killed in an Israeli strike– a move that could elicit bitter retaliation from Iran.
Oil prices remained largely upbeat on the prospect of continued supply disruptions from the Iran conflict, with Brent having rallied over 40% since the onset of the war in late-February.
OCBC analysts said in a note that they expect oil to remain above $100/barrel until at least mid-2026, with the Iran conflict expected to continue underpinning crude amid few pathways for de-escalation.
Source: Investing