KEY POINTS
- API reports a 6.56 million barrel increase, exceeding market expectations.
- Iraqi exports to Turkey resume; Libyan Sharara field rerouted after a fire, maintaining production.
- Assassination of Iran’s Ali Larijani and U.S. strikes near the Strait of Hormuz impact oil market sentiment, with potential implications for conflict resolution.
Oil prices fell modestly on Wednesday morning after the American Petroleum Institute (API) reported a significant increase in U.S. crude inventories. Brent crude futures dropped $1.15, or 1.11%, settling at $102.27 per barrel, while West Texas Intermediate (WTI) crude fell $1.54, or 1.6%, to $94.67 per barrel.
Market expectations had forecast a smaller rise, with a Reuters poll estimating an increase of roughly 380,000 barrels. Instead, U.S. crude stockpiles jumped by 6.56 million barrels for the week ending March 13, indicating a potential temporary oversupply in the U.S. market.
The oil supply landscape saw mixed signals this week. Iraq announced that its government had reached an agreement with the Kurdistan Regional Government to resume oil exports to Turkey’s Ceyhan energy hub, with flows scheduled to begin Wednesday at 10 a.m. local time (0700 GMT).
Meanwhile, Libya’s National Oil Corporation confirmed that production at the Sharara oilfield remained operational despite a recent fire, with crude flows being rerouted through alternative pipelines. Authorities reported no casualties from the incident.
Geopolitical Tensions Influence Market Sentiment
Tensions in the Middle East also weighed on markets. Iran confirmed the assassination of its security chief Ali Larijani by Israeli forces, the most senior target since the onset of the U.S.-Israeli conflict. In addition, the United States military struck Iranian coastal sites near the Strait of Hormuz, citing threats from Iranian anti-ship missiles to international shipping.
Some analysts, including Mingyu Gao, chief researcher for energy and chemicals at China Futures, suggested that these developments could paradoxically ease market fears if they signal a quicker resolution to the ongoing regional conflict.
