Geopolitical Tensions Sustain Crude Oil Gains Amid Regional Uncertainty

Price Movement Overview

February WTI crude oil futures climbed +0.71 points (+1.20%) today, while February RBOB gasoline advanced +0.0136 (+0.76%). Both commodities are recovering ground after Thursday’s substantial selloff, as market participants cover short positions ahead of the weekend while navigating mounting geopolitical concerns.

The Iran Factor Underpinning Markets

Unrest within Iran, OPEC’s fourth-largest oil producer, continues to bolster crude valuations despite a temporary easing of immediate US military intervention threats. The country’s lingering internal turmoil—marked by widespread protests against government policies tied to currency devaluation and economic contraction—keeps markets on edge. With Iranian security forces having suppressed thousands of demonstrators, and President Trump signaling potential military action if crackdowns intensify, the risk premium persists.

The US military posture reflects this uncertainty. An aircraft carrier strike group is being repositioned into the Middle East, complemented by additional military asset deployments scheduled for coming weeks and days. Reuters reported that select US personnel received advisories to depart the Al Udeid Air base in Qatar, a facility previously targeted by Iranian retaliatory strikes following US operations against Iranian nuclear sites.

Supply Chain Disruptions Across Multiple Fronts

Iran’s production capacity exceeds 3 million barrels per day. Should domestic instability worsen or lead to direct US intervention against government infrastructure, crude output could face significant disruption—a scenario markets are clearly pricing in.

Adding to supply pressures, drone attacks on oil tankers near Russia’s Black Sea Caspian Pipeline Consortium terminal have slashed loadings by roughly half to approximately 900,000 bpd. Meanwhile, Ukrainian forces have intensified strikes on Russian oil infrastructure, targeting at least 28 refineries over four months and six tankers in recent weeks. New US and EU sanctions targeting Russian energy companies, infrastructure, and vessels further constrain export capabilities.

Demand Strength from Asia

Chinese crude imports are providing a counterbalance. December purchases are projected to increase 10% month-over-month to an unprecedented 12.2 million bpd as Beijing rebuilds strategic reserves, offering price support.

OPEC+ Production Strategy

OPEC+ reaffirmed on January 3 its intention to pause production increases throughout Q1 2026, having lifted output by 137,000 bpd in December but facing a potential global surplus. The organization still has 1.2 million bpd of its 2.2 million bpd production cut remaining to restore. OPEC’s December crude production rose by 40,000 bpd to 29.03 million bpd.

Inventory and Production Dynamics

The EIA’s latest assessments painted a mixed picture: US crude inventories as of January 9 sat 3.4% below the five-year seasonal average, while gasoline stocks were 3.4% above normal levels, and distillates fell 4.1% beneath averages. US crude production dipped 0.4% week-over-week to 13.753 million bpd during the same period.

Active US oil rig counts slipped by three to 409 units in the week ending January 9, approaching the 4.25-year trough of 406 rigs recorded in December. The broader trend shows a dramatic contraction from the 5.5-year peak of 627 rigs in December 2022.

Market Outlook

Tanker storage on stationary vessels fell 0.3% week-over-week to 120.9 million barrels through January 9, according to Vortexa data. The IEA projected the global crude surplus could widen to a record 3.815 million bpd in 2026 from over 2.0 million bpd in 2025, though lingering Middle Eastern tensions and supply constraints continue offering near-term support for valuations.