WTI Slides on Iraq's West Qurna 2 Recovery, Though Geopolitical Tensions Offer Some Floor

TokenomicsTherapist · 2026-01-06T17:32:01+00:00

WTI crude has retreated to around $58.65 as Iraq resumes production at the West Qurna 2 oilfield. This supply recovery pressures prices amid geopolitical tensions from the Ukraine conflict and anticipation of a potential Fed rate cut.

TokenomicsTherapist

2026-01-06 17:32:01

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WTI crude retreats toward $58.50 as Iraq brings the West Qurna 2 oilfield back online.

West Texas Intermediate is trading near $58.65 during Tuesday’s early Asian session, having given back some of Monday’s gains. The retreat comes as Iraq successfully resumed production at the West Qurna 2 facility following maintenance work on an export pipeline. This oilfield, operated by Lukoil, pumps over 460,000 barrels per day and represents roughly 0.5% of global oil output—underscoring OPEC’s second-largest producer’s role in international energy markets.

Supply Recovery Pressures Prices Despite Geopolitical Headwinds

The restoration of Iraqi production is weighing on WTI momentum at a time when traders are already bracing for the American Petroleum Institute’s latest crude stockpile inventory report, due later today. The supply recovery is straightforward bearish pressure, yet the broader geopolitical landscape is providing a countervailing support floor.

Ukraine-Russia Tensions Keep Energy Markets on Edge

The ongoing uncertainty surrounding US-Ukraine peace negotiations continues to influence market sentiment. US President Donald Trump recently expressed frustration with Ukrainian leadership’s response to American proposals for resolving the four-year conflict, while Ukrainian officials maintain that no concrete agreement exists yet on ending hostilities. Such stalemate conditions typically keep a risk premium embedded in crude valuations, as energy market participants fear potential disruptions to Russian supply flows.

Fed Rate Decision Looms as Another Price Driver

Oil traders are equally focused on the US Federal Reserve’s interest rate decision scheduled for Wednesday. Market expectations are tilted toward a quarter-point rate cut, which could bolster demand forecasts for next year. Lower rates typically weaken the US Dollar, making crude—priced in USD—more affordable for international buyers and potentially lifting WTI prices higher going forward.

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