West Texas Intermediate (WTI) crude oil edged lower on Wednesday, trading around $63.50 per barrel in Asian hours, following a more than 2% drop in the previous session. Prices remain supported by supply concerns after the American Petroleum Institute’s (API) Weekly Statistical Bulletin reported a 3.8 million-barrel draw in US crude inventories last week, the largest weekly decline in seven weeks, following a 3.4 million-barrel drop previously.
Supply bottlenecks from Iraq’s kurdistan
Oil markets were also lifted as Iraq’s Kurdistan region did not resume pipeline shipments to Turkey despite expectations of a deal. The halt, ongoing since March 2023, continues due to debt repayment disputes between key producers.
Geopolitical tensions underpin prices
Geopolitical risks continue to support crude. NATO pledged a “robust” response to recent Russian airspace violations and Ukrainian drone attacks on Russian infrastructure. Meanwhile, US President Donald Trump warned at the UN General Assembly that the United States is prepared to impose “very strong” tariffs on Russia if it refuses to end the war in Ukraine. He criticized European reliance on Russian energy, arguing it funds the conflict, and urged the EU to coordinate tariff actions with Washington.
Demand concerns amid cautious Fed
Despite supply pressures, WTI faces headwinds from potential weaker demand. Fed Chair Jerome Powell reiterated that the central bank must weigh persistent inflation against a softening labor market, describing the current environment as “a challenging situation.” Higher US interest rates could slow economic activity, the world’s largest oil consumer, and limit crude demand.
