February WTI crude oil (CLG26) today is up +0.71 (+1.20%), and February RBOB gasoline (RBG26) is up +0.0136 (+0.76%).
Crude oil and gasoline prices are moving higher today as they recover some of Thursday's sharp selloff. Geopolitical risks in Iran are supporting crude prices even as the chance of an immediate US response to violent protests in Iran has eased, as the US is boosting its military presence in the Middle East.
Pre-weekend short covering in crude futures is supporting prices today amid heightened geopolitical risks in Iran. While the threat of an immediate intervention from the US against Iran has subsided, the US is moving an aircraft carrier strike group into the Middle East, and other military assets are expected to be shifted there in the coming days and weeks, according to Fox News.
Unrest in Iran, OPEC's fourth-largest producer, is underpinning crude prices as thousands of protesters have taken to the streets in many cities of Iran to protest government policies that have triggered a currency crisis and economic collapse. Iranian security forces have killed thousands of protesters, and President Trump said he may attack Iran if the government continues to kill protesters. Reuters reported on Wednesday that some US personnel have been advised to leave the US Al Udeid Air base in Qatar. The facility was targeted by Iran in retaliatory airstrikes last year after the US attacked Iran's nuclear facilities. Iran, OPEC's fourth-largest producer, produces more than 3 million bpd, and its crude production could be disrupted if the protests against the government worsen and the US decides to strike government targets.
Crude is also finding support after drone attacks on oil tankers near the Caspian Pipeline Consortium terminal on Russia's Black Sea Coast have reduced crude loadings at the terminal by almost half to around 900,000 bpd.
Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least 7 days fell -0.3% w/w to 120.9 million bbl in the week ended January 9.
Strength in Chinese crude demand is supportive for prices. According to Kpler data, China's crude imports in December are set to increase by 10% m/m to a record 12.2 million bpd as it rebuilds its crude inventories.
Crude garnered support after OPEC+ on January 3 said it would stick to its plan to pause production increases in Q1 of 2026. OPEC+ at its November 2025 meeting announced that members would raise production by +137,000 bpd in December, but will then pause the production hikes in Q1-2026 due to the emerging global oil surplus. The IEA in mid-October forecasted a record global oil surplus of 4.0 million bpd for 2026. OPEC+ is trying to restore all of the 2.2 million bpd production cut it made in early 2024, but still has another 1.2 million bpd of production left to restore. OPEC's December crude production rose by +40,000 bpd to 29.03 million bpd.
Ukrainian drone and missile attacks have targeted at least 28 Russian refineries over the past four months, limiting Russia's crude oil export capabilities and reducing global oil supplies. Also, since the end of November, Ukraine has ramped up attacks on Russian tankers, with at least six tankers attacked by drones and missiles in the Baltic Sea. In addition, new US and EU sanctions on Russian oil companies, infrastructure, and tankers have curbed Russian oil exports.
Last month, the IEA projected that the world crude surplus will widen to a record 3.815 million bpd in 2026 from a 4-year high of over 2.0 million bpd in 2025.
On Tuesday, the EIA raised its 2026 US crude production estimate to 13.59 million bpd from 13.53 million bpd last month, and cut its US 2026 energy consumption estimate to 95.37 (quadrillion btu) from 95.68 last month.
Wednesday's EIA report showed that (1) US crude oil inventories as of January 9 were -3.4% below the seasonal 5-year average, (2) gasoline inventories were +3.4% above the seasonal 5-year average, and (3) distillate inventories were -4.1% below the 5-year seasonal average. US crude oil production in the week ending January 9 was down -0.4% w/w to 13.753 million bpd, just below the record high of 13.862 million bpd from the week of November 7.
Baker Hughes reported last Friday that the number of active US oil rigs in the week ended January 9 fell by -3 to 409 rigs, just above the 4.25-year low of 406 rigs posted in the week ended December 19. Over the past 2.5 years, the number of US oil rigs has fallen sharply from the 5.5-year high of 627 rigs reported in December 2022.
On the date of publication, Rich Asplund did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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