By the midday break, the Straits Times Index (STI) was down 0.85 percent, or 26.20 points, at 3,041.40. The total value of shares traded in the morning session was S$778.7 million, lower than S$999.2 million on Tuesday.

Local traders said that the STI may trade between 3,000 and 3,050 points in the afternoon.

Shares in Tokyo tumbled 2.1 percent, while the MSCI index of Asia-ex Japan stocks shed 1 percent.

However, though Asian stocks have reacted to swings in oil, markets have been largely resilient compared with January's sell-off when investors dumped shares due to inflationary concerns.

"Overnight the US market came off 1 over percent and there is also a lot of profit-taking largely because the environment is still very unstable. When you are not sure, that will continue to rein in gains," said Carmen Lee, head of OCBC Investment Research.

"Overall sentiment is that if oil goes up, it's actually negative for most companies on the cost side. A lot of it depends on how oil price moves in the next couple of weeks, but political risk is very hard to assess," she added.

Palm oil firm Golden Agri-Resources fell as much as 4.3 percent after seeing huge gains on Tuesday driven by its strong fourth-quarter earnings and palm oil outlook.

At midday, Golden Agri shares were down 2.8 percent at S$0.685 on a volume of 56 million shares.

However, shares of Singapore's oil and gas services firm Ezra Holdings rose as much as 3.7 percent, outperforming the broader market, after it said it had won a $41 million contract from Norway's Statoil .

At midday, Ezra shares were 2.5 percent higher at S$1.66 with 4.7 million shares changing hands.