Energy Markets Show Twin Strength as RBOB and WTI Rally Amid Geopolitical Pressures

Recent market movements have underscored the resilience of energy commodities in the face of mounting global tensions. Both crude oil and refined product markets have posted impressive gains, with WTI crude and RBOB gasoline advancing simultaneously in response to a complex interplay of supply constraints, geopolitical risks, and shifting demand patterns. The synchronized rally between these two benchmark products reflects the interconnected nature of energy markets and their sensitivity to global events.

Refined Products and Crude Oil Accelerate Higher

The energy complex has demonstrated notable strength in recent weeks. WTI crude oil climbed by more than 2.7% during the period under review, while RBOB gasoline advanced approximately 1.7%, with both products reaching their highest levels in several days. The outperformance in crude oil relative to RBOB gasoline reflects the distinct supply pressures affecting each segment of the energy market. The weakening US dollar has provided an additional tailwind for energy prices, as commodities priced in dollars become more attractive to international buyers when the currency depreciates.

The parallel movement of WTI and RBOB demonstrates how geopolitical developments ripple through multiple layers of the energy complex. RBOB gasoline, as a refined product derived from crude oil, typically follows WTI price trends but may diverge based on refinery throughput, demand dynamics, and logistical factors. The recent strengthening in both benchmarks suggests broad-based energy market resilience.

Geopolitical Flashpoints Reshape Supply Calculus

The primary driver behind the energy rally stems from escalating geopolitical tensions that threaten to disrupt global crude supplies. Russian officials have rejected optimism regarding peace negotiations with Ukraine, emphasizing that territorial disputes remain unresolved. The Kremlin’s intransigence suggests that international sanctions targeting Russian oil exports will persist indefinitely, providing lasting structural support to global crude prices.

Former President Trump’s renewed threats of military intervention against Iran inject another layer of uncertainty into market calculations. Reports indicate that a US Navy flotilla has been redirected toward the Middle East, signaling potential military action. Adding to the pressure, news accounts suggest that US policymakers are weighing restrictions on dollar access for Iraqi oil transactions—a move designed to constrain Iranian-backed militia activities. These developments carry profound implications for a major OPEC producer that normally supplies over 3 million barrels per day.

Supply disruptions originating from Kazakhstan have compounded the upward pressure on crude and RBOB prices. Fires at the Tengiz and Korolev oil fields have forced temporary closures, reducing Kazakhstani output by approximately 900,000 barrels daily. The disruption cascades through the Caspian Pipeline Consortium terminal on Russia’s Black Sea coast, which sustained damage from recent drone strikes. Such physical supply constraints typically translate into sustained upward momentum for both WTI and refined product markets.

Ukraine’s campaign against Russian energy infrastructure has inflicted additional strain on global supplies. Over the preceding five months, Ukrainian forces have targeted at least 28 Russian refineries through drone and missile strikes, impairing Moscow’s export capacity. Separately, attacks on Russian tankers transiting the Baltic Sea—with at least six vessels struck since late November—have further tightened available crude flows. Combined with new US and EU sanctions on Russian oil assets and infrastructure, these developments forecast a structurally tighter energy market in the months ahead.

Demand Strength and Supply Outlook Challenge Market Balance

Counterbalancing some supply concerns, robust demand from China continues to underpin crude prices. Chinese crude imports are anticipated to climb approximately 10% month-over-month in the coming weeks, potentially reaching a record 12.2 million barrels per day as the nation replenishes strategic reserves. This demand impulse sustains pricing floors for both WTI and downstream products like RBOB.

The International Energy Agency trimmed its 2026 global crude surplus forecast to 3.7 million barrels per day, a slight downward revision from previous estimates. Concurrently, the US Energy Information Administration raised its 2026 domestic crude production outlook to 13.59 million barrels per day, while reducing energy consumption projections. These adjustments suggest a gradually tightening market environment over the forecast period.

OPEC+ has declared that it will maintain a production pause through the first quarter of 2026, with no further increases anticipated until after March. The cartel previously agreed to an output bump of 137,000 barrels daily in December but opted to freeze production thereafter due to the emerging global surplus. The organization continues working toward reinstating the 2.2 million barrel daily reduction initiated in early 2024, with 1.2 million barrels still pending restoration. December OPEC crude production registered at 29.03 million barrels per day, up marginally from prior months.

US Crude Inventories and Rig Activity Reflect Market Conditions

Data as of mid-January illustrated a mixed inventory picture across the US energy complex. Crude oil stocks registered 2.5% below five-year seasonal norms, suggesting moderately tight conditions. Gasoline inventories, by contrast, stood 5% above the seasonal average, indicating abundant refined product supplies. Distillate stocks were essentially flat to seasonal norms at 0.5% below the five-year comparison.

US crude production during the mid-January week edged down 0.2% to 13.732 million barrels per day, remaining marginally below the record set in November. Active US oil rig counts ticked upward by one unit to 410 during the same period, hovering just above recent lows of 406. However, the longer-term trajectory remains decidedly downward, with rig counts declining sharply from a peak of 627 in December 2022.

The relative flatness in crude inventories despite the supply disruptions outlined above highlights the precarious nature of global energy balance. Any further supply interruptions—whether from Ukraine’s strikes on Russian infrastructure, escalating Iran tensions, or unforeseen production outages—could quickly strain crude markets and elevate both WTI and RBOB prices. The refined product market, as reflected in RBOB gasoline pricing, remains particularly sensitive to refinery utilization rates and transportation constraints, factors that warrant close monitoring in the months ahead.