Tensions in Middle East raise concerns over supply disruptions in region, limiting further price losses
Oil prices fell slightly on Wednesday after a US-Russia agreement on a 30-day ceasefire of attacks on Ukraine's energy infrastructure, which could allow more Russian oil into global markets already wary of a potential supply surplus.
The international benchmark, Brent crude, fell around 0.07%, trading at $70.01 per barrel at 11.07 am local time (0807GMT), down from $70.06 at the previous session's close.
US benchmark West Texas Intermediate (WTI) lost 0.03%, settling at $66.52 per barrel, compared to its prior session close of $66.54.
US President Donald Trump and his Russian counterpart Vladimir Putin held a lengthy phone call on Tuesday to discuss a possible ceasefire in Ukraine, with Trump later stating that they agreed to an "immediate" ceasefire on all energy and infrastructure attacks amid the ongoing conflict.
Ukrainian President Volodymyr Zelenskyy later expressed support for a 30-day ceasefire on energy infrastructure.
Following this, Trump's special envoy Steve Witkoff said talks on a ceasefire would continue on Sunday in Jeddah, Saudi Arabia.
Russia, a leading global oil supplier, has faced energy sanctions since the war began, but a potential ceasefire could ease sanctions, relaxing restrictions on oil trade.
At the same time, tensions in the Middle East heightened concerns about supply disruptions in the region, as Israel escalated its military actions in Gaza and Syria.
The US is also increasing pressure on Iran, with Trump warning that Tehran will be held accountable for any further attacks by Yemen's Houthi rebels.
Over the weekend, more than 50 people were killed and nearly 100 injured in US strikes, with Trump warning that "hell will rain down" on Yemen if the group continues to target Red Sea shipping.
US tariffs on Canada, Mexico, and China heightened recession fears, as the potential for reduced demand weighed on oil prices.
Investors are awaiting a decision by the US Federal Reserve following its policy meeting on Wednesday, with expectations that rates will remain unchanged.
Fed Chairman Jerome Powell's verbal guidance will be closely monitored, along with the potential impact of tariff tensions on the Fed's projections.
Meanwhile, the American Petroleum Institute (API) reported a 4.59 million barrel rise in US commercial crude oil stocks last week, surpassing market expectations of a 1.17 million barrel increase, pointing to weaker demand in the US.
The US Energy Information Administration (EIA) is expected to announce official inventory data later in the day.
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