Brent crude fell to 64.91 dollars per barrel on Tuesday, down 0.86 percent from the previous day, pausing a four day rally as geopolitical tensions competed with rising United States inventories for influence over trader sentiment.
The benchmark had climbed nearly three percent to 65.60 dollars on Monday, reaching a 12 week high, driven by escalating rhetoric between Washington and Tehran. However, Tuesday’s decline reflected the market’s reassessment after the American Petroleum Institute (API) reported crude stockpiles rose by 5.3 million barrels in the week ending January 9, substantially exceeding analyst expectations of a two million barrel build.
Gasoline inventories increased by 8.2 million barrels according to the API data released Monday evening, while distillate stocks, which include diesel and heating oil, rose by 4.3 million barrels. The official government inventory report from the Energy Information Administration (EIA) was scheduled for release Wednesday morning.
Despite the inventory build, which would typically pressure prices downward, oil markets remained focused on supply risks emanating from Iran and the broader Middle East. President Donald Trump announced Monday that any nation conducting business with Iran would face 25 percent tariffs effective immediately, intensifying economic pressure on the Islamic Republic amid widespread domestic protests.
Some personnel at Al Udeid Air Base in Qatar, the largest United States military facility in the Middle East housing approximately 10,000 troops, were advised to leave by Wednesday evening. Three diplomats characterized the move as a posture change rather than an ordered evacuation, though no specific reason was provided.
A senior Iranian official told Reuters that Tehran warned regional countries hosting American military bases they could become targets if Washington launches strikes. The warning was reportedly delivered to Saudi Arabia, the United Arab Emirates, Turkey, and Qatar. Last June, Iran fired missiles at Al Udeid following United States air strikes on Iranian nuclear facilities.
Iran produces roughly 3.3 million barrels of crude per day, making it the Organization of the Petroleum Exporting Countries’ (OPEC) fourth largest producer. Any sustained disruption to Iranian output would tighten global supplies, particularly affecting flows to Asia and Europe.
Additional supply concerns emerged from Kazakhstan, where adverse weather conditions, maintenance work, and damage to Russian pipeline infrastructure from Ukrainian drone attacks have affected oil output. Venezuela prepared to resume exports following political changes in Caracas, potentially releasing up to 50 million barrels of previously sanctioned crude to the United States market.
Over the past month, Brent has risen 7.18 percent as investors weighed the interplay between weakening demand signals from China and supply risks from producing regions. The benchmark remains 20.87 percent below levels recorded in January 2025, when prices traded near 82 dollars per barrel before OPEC production increases and slower global growth pressured the market lower throughout the year.
West Texas Intermediate (WTI), the United States benchmark, recently traded at 61.12 dollars per barrel after settling up 2.8 percent at 61.15 dollars on Monday. The Brent WTI spread, which measures the premium for international crude over domestic supplies, widened slightly as geopolitical risk premium returned to the market.
Market participants noted that geopolitical developments have historically outweighed inventory data when traders assess oil prices, particularly during periods of heightened Middle East tensions. The divergence between rising stockpiles and climbing prices in recent sessions illustrated how supply disruption fears can override typical demand signals.
Analysts expect volatility to persist as long as the situation between Washington and Tehran remains unresolved. The combination of threatened military intervention, economic sanctions, and regional instability has kept risk premium embedded in crude prices despite evidence of adequate near term supplies.
