February WTI crude oil closed up $1.65 on Tuesday, while February RBOB gasoline rose $0.0327. Crude reached a 2.25-month high, and gasoline hit a 5-week high.
President Trump escalated rhetoric regarding Iran, raising concerns about potential supply disruptions from OPEC's fourth-largest producer. Thousands of protesters have taken to the streets in many Iranian cities, and security forces have killed hundreds. President Trump stated "help is on the way," and the military has briefed him on options if Iran continues to kill protesters. Iran produces over 3 million barrels per day.
Drone attacks have disrupted operations at the Caspian Pipeline Consortium terminal on Russia's Baltic Coast, reducing crude loadings by almost half to around 900,000 barrels per day. Ukrainian drone and missile attacks have targeted at least 28 Russian refineries over the past four months, and at least six tankers have been attacked in the Baltic Sea since late November. New U.S. and EU sanctions on Russian oil companies have also curbed exports.
Chinese crude imports in December are set to increase by 10% month-over-month to a record 12.2 million barrels per day, according to Kpler data. Vortexa reported that crude oil stored on stationary tankers fell 0.3% week-over-week to 120.9 million barrels in the week ended January 9.
OPEC+ said on January 3 it would stick to its plan to pause production increases in the first quarter of 2026. The group had announced a production increase of 137,000 barrels per day for December. OPEC's December crude production rose by 40,000 barrels per day to 29.03 million barrels per day. The IEA forecasted a record global oil surplus of 4.0 million barrels per day for 2026 in mid-October.
The annual rebalancing of commodity indexes is expected to lead to the purchase of oil contracts this week. Citigroup projects the BCOM and S&P GSCI indexes will see inflows of $2.2 billion in futures contracts.
The EIA on Tuesday raised its 2026 U.S. crude production estimate to 13.59 million barrels per day and cut its U.S. 2026 energy consumption estimate. Consensus expects Wednesday's weekly EIA report to show a decline in crude inventories and an increase in gasoline supplies. Last Wednesday's EIA report showed U.S. crude oil inventories were 4.1% below the seasonal 5-year average as of January 2. U.S. crude oil production in the week ending January 2 was 13.811 million barrels per day.
Baker Hughes reported the number of active U.S. oil rigs fell by 3 to 409 rigs in the week ended January 9.