Oil prices moved lower on Wednesday, pausing after a strong two-day rally as an unexpected increase in U.S. crude inventories weighed on the market.
However, prices remained elevated as investors continued to assess the risk of further supply disruptions across the Middle East.
Brent and WTI Pull Back
Brent crude futures fell 1.4% to around $107.27 per barrel, while West Texas Intermediate futures declined 2.0% to approximately $103.68.
The pullback followed fresh data showing a larger-than-expected rise in U.S. crude stockpiles.
According to the American Petroleum Institute, U.S. inventories increased by 7.14 million barrels in the week ending Sept. 11.
Markets had expected a decline of roughly 1.8 million barrels.
Official inventory figures are due later in the day.
U.S. Crude Inventories Surprise Markets
The unexpected inventory build suggests that U.S. supply conditions may be looser than traders had anticipated.
Part of the increase could also be linked to continued activity involving the U.S. Strategic Petroleum Reserve.
Energy Information Administration data showed that the SPR has declined by nearly 130 million barrels so far in 2026, falling to about 285.36 million barrels.
The latest inventory figures temporarily reduced some of the upward pressure on crude prices.
Middle East Supply Risks Remain Elevated
Despite Wednesday’s decline, both Brent and WTI have gained at least 6% over the past week.
The rally has been driven largely by concerns that the Middle East conflict is expanding beyond Iran and the Strait of Hormuz.
Iran-backed Houthi forces have carried out attacks on Saudi Arabia, increasing fears over the stability of regional energy infrastructure.
Saudi Arabia has shut down a key east-west pipeline that had been used as an alternative route for crude exports around the Strait of Hormuz.
Saudi Export Routes Face Disruption
Saudi Arabia has also suspended loadings at the Yanbu port.
At the same time, the kingdom has offered additional cargoes to Asian refiners through ship-to-ship transfers near Oman’s Sohar port.
These measures highlight the growing logistical challenges facing Saudi oil exports.
The Houthis have also expanded their influence in western Yemen, increasing concerns over the Bab el-Mandeb Strait.
Together with the Strait of Hormuz, Bab el-Mandeb is one of the most important chokepoints for global oil shipments.
Libya Adds to Global Supply Concerns
Supply risks are not limited to the Gulf region.
Media reports indicated that production at three oil fields in Libya has also been suspended.
Any prolonged reduction in Libyan output could further tighten global crude supply at a time when Middle East disruptions are already supporting prices.
Higher Oil Prices Add to Inflation Pressure
The recent rise in oil prices has also increased concerns about energy-driven inflation.
Higher crude prices can push up transportation and production costs, adding pressure to consumer prices.
The impact has also been visible in bond markets.
The benchmark 10-year U.S. Treasury yield recently climbed to its highest level in nearly two decades before easing.
Fed Rate Decision Also in Focus
Markets are also closely watching the Federal Reserve.
Traders are pricing in around a 92% probability that the Fed will raise interest rates at the conclusion of its latest policy meeting.
Higher interest rates can help reduce inflation by slowing economic activity.
However, tighter monetary policy can also weigh on employment, consumer demand and economic growth.
For now, oil markets remain caught between rising U.S. inventories and persistent concerns over global supply disruptions.
