Oil prices fell on Wednesday, as an expected increase in US oil inventories outweighed a temporary halt in production at two major fields in Kazakhstan and geopolitical pressure from the US, which threatened to impose tariffs over an attempt to gain control of Greenland, UNN reports with reference to Reuters.
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Brent crude futures fell 76 cents, or 1.2%, to $64.16 a barrel at 04:45 GMT (06:45 Kyiv time). The US West Texas Intermediate contract lost 60 cents, or 1%, and traded at $59.76 a barrel.
Both contracts closed almost $1 a barrel, or 1.5%, higher in the previous session after Kazakhstan, an OPEC+ member, halted production at the Tengiz and Korolev fields on Sunday due to power distribution problems. Strong economic data from China also had a positive impact.
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Oil production at the two Kazakh fields could be suspended for another seven to ten days, three industry sources told Reuters.
The suspension of oil production at Tengiz, one of the world's largest oil fields, and Korolev is temporary, and the downward pressure caused by the expected increase in US oil inventories, as well as geopolitical tensions, will persist, said IG market analyst Tony Sycamore.
US President Donald Trump's promise to impose new tariffs on European countries if no agreement is reached on US control of Greenland is increasing pressure on oil markets, as tariffs risk slowing economic growth.
On Tuesday, Trump said there was "no turning back" in his quest to control Greenland.
A preliminary Reuters poll conducted on Tuesday showed that US crude and gasoline inventories were expected to have risen last week, while distillate inventories were likely to have fallen.
While such an increase in inventories would negatively impact oil prices, Gregory Brew, a senior analyst at Eurasia Group consulting firm, said that a potential escalation of tensions between the US and Iran would contribute to higher oil prices.
Earlier this month, Trump threatened to strike Iran over its brutal crackdown on anti-government protests.
Any attack on Iran's supreme leader Ayatollah Ali Khamenei would lead to a declaration of jihad, or holy war, ISNA quoted the Iranian parliamentary national security commission as saying on Tuesday.
"While the US has refrained from immediately striking Iran, tensions are likely to remain high as additional US military forces are deployed to the Middle East and diplomatic efforts to de-escalate tensions yield no results," Brew's note said.
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