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Oil prices edged lower in Asian trading on Wednesday after the previous session’s sharp rally driven by fears of supply disruptions in Iran, as investors turned their attention to data showing a sizeable build in U.S. crude inventories.
Brent futures for March slipped 0.4% to $65.19 a barrel by 01:18 GMT, while West Texas Intermediate crude fell 0.5% to $60.87 a barrel.
The pullback follows a powerful move on Tuesday, when both benchmarks surged more than 2.5%, pushing Brent to an 11 week high and WTI to a 10 week peak, extending gains for a fourth consecutive session.
Iran Unrest Keeps Risk Premium Elevated
The rally earlier in the week was fuelled by mounting geopolitical risks tied to intensifying anti government protests in Iran, one of OPEC’s largest producers. Markets have increasingly priced in a risk premium on fears that prolonged unrest could eventually disrupt crude exports.
U.S. President Donald Trump added to market unease by warning of possible military action if Iranian authorities continue using lethal force against demonstrators. He urged protesters to “take over your institutions,” saying online that “help is on the way.”
Trump has also threatened tariffs on countries that continue trading with Tehran, a move aimed at isolating the regime and further amplifying geopolitical uncertainty in energy markets.
U.S. Crude Inventories Jump
Offsetting some of the bullish momentum, data from the American Petroleum Institute showed U.S. crude stockpiles rose by 5.3 million barrels last week, far above expectations for a build of around 2 million barrels.
The report also showed gasoline inventories climbing by about 8.2 million barrels and distillates rising by roughly 4.3 million barrels, underscoring ample supplies of refined products in the world’s largest fuel market.
Traders are now awaiting official figures from the U.S. Energy Information Administration later on Wednesday to confirm the direction of crude and product inventories.
