On Tuesday, February WTI crude oil closed up $1.65 (+2.77%) at a 2.25-month high, while February RBOB gasoline increased by $0.0327 (+1.82%), reaching a 5-week high. The surge in prices is primarily attributed to heightened tensions concerning Iran, as President Trump suggested military options in response to unrest in the country that could disrupt its production of over 3 million barrels per day (bpd). Additionally, drone attacks have reduced crude loadings at the Caspian Pipeline Consortium terminal by almost half, impacting global supply.
OPEC+ plans to maintain its production pause in Q1 2026 despite an increase in output of 40,000 bpd in December to 29.03 million bpd, aiming to restore a 2.2 million bpd cut made in early 2024. The International Energy Agency (IEA) forecasts a record global oil surplus of 4.0 million bpd in 2026. Meanwhile, the upcoming EIA report is expected to show a decline in US crude inventories by 1.68 million barrels.
Crude oil demand from China is also rising, with imports projected to hit a record 12.2 million bpd in December, a monthly increase of 10%. The US Energy Information Administration (EIA) has raised its 2026 crude production estimate to 13.59 million bpd. As of January 2, US crude oil inventories were reported to be 4.1% below the seasonal 5-year average.
