Oil prices dropped in a sudden move on Wednesday, giving back some of the rally this month amid supply disruptions stemming from Russia's invasion of Ukraine.
WTI crude oil tumbled more than 12%, or $15, to settle at $108.7 per barrel, registering its worst day since Nov. 26. Earlier this week, WTI topped $130 per barrel briefly — a 13-year high — during escalated geopolitical tensions.
Brent crude oil, the international benchmark, fell a similar 13%, or $16.8 to $111.1, for its biggest one-day drop since April 2020. Brent has just hit $139 on Monday, its highest since 2008.
The move in oil lower came amid indications of possible progress by the U.S. in encouraging more oil production from other sources. Reuters reported that Iraq said it could increase output if OPEC+ asks. Secretary of State Antony Blinken also signaled that UAE would support increased production by OPEC+.
"That $130 price point was factoring in the absolute siege mentality in the oil market, where we were staring down potentially losing all Russian output, OPEC not budging and the Ukraine situation just worsening," John Kilduff of Again Capital said on CNBC's "The Exchange." "Now we've reversed all of that, seemingly, to a degree at least. I don't want to get ahead of myself."
Last week, the International Energy Agency released 60 million barrels of oil reserves to compensate for supply disruptions following Russia's invasion, and the agency called the move "an initial response" and said more could be released if needed.
Still, oil prices have surged this month with WTI crude oil up roughly 15% as Russia, the world's second-largest crude exporter, invaded Ukraine.
"The world is working together to tackle surging oil prices and that has put a short-term top for crude," Ed Moya, senior market analyst at Oanda, said in a note.
The United Kingdom announced its own restrictions on buying Russian oil imports, saying it will phase out the country's imports by the end of the year. The European Union also unveiled a plan to wean itself off of Russian fossil fuels.
— CNBC's Jesse Pound contributed reporting.