Crude oil futures retreated on Wednesday as signals emerged that some recent supply disruptions in the Middle East are beginning to ease, prompting traders to adjust positions after a sharp rally in the previous sessions.

Brent crude settled near $106 a barrel after a decline, while West Texas Intermediate (WTI) fell more than 3%. This followed an announcement from Saudi Arabia indicating it was seeking to restore roughly half of the capacity of the east-west pipeline that was shut down last week due to drone attacks. Simultaneously, the kingdom is boosting sales of crude loaded outside the Strait of Hormuz. In a separate development, Libya's oil production has returned to normal after a partial halt at some fields earlier this week.

Oil prices had surged 4% over the prior two sessions on concerns that a war with Iran could trigger new supply disruptions, including the potential for a prolonged closure of Saudi Arabia's east-west pipeline. The 14-day relative strength index for Brent moved above 70, entering overbought territory, which may signal an impending correction.

With the outbreak of the US-Iran conflict and the ongoing Russia-Ukraine war, oil prices have soared nearly 80% so far this year. This surge in crude, coupled with an even larger jump in fuel costs, has intensified worries about global inflation. Adding to the policy response, the Federal Reserve joined several other central banks in tightening monetary policy, voting on Wednesday to raise interest rates by 25 basis points to counter price pressures.

Charu Chanana, chief investment strategist at Saxo Markets in Singapore, noted that the current dip in oil prices should be viewed as "a temporary breather, not a clear reversal," cautioning that risks remain elevated. She added that any further escalation or prolonged supply disruption could quickly re-impose upward pressure on prices.

Brent crude for November delivery settled 2.7% lower at $105.83 a barrel, while WTI for October delivery closed down 3.2% at $102.43 a barrel.