Russian oil exports remain robust, with seaborne crude shipments at 3.7 million barrels per day last week. The four-week average has increased to 3.82 million barrels per day, the highest since May 2023, according to Bloomberg. Ongoing drone attacks on Russian oil refineries are increasing the amount of crude oil available for export. These attacks have also affected Kazakhstan, causing a short-term drop in oil production.

Kazakhstan Production Impact

The decrease in Kazakhstan’s oil production is expected to be small and temporary. Kazakhstan usually produces more oil than the OPEC+ agreement allows, so this recent dip shouldn’t have a major impact. Russian seaborne crude exports are at their highest level since May 2023, averaging 3.82 million barrels per day over four weeks. This high volume, driven by reduced domestic refining capacity, is likely to put downward pressure on crude prices. However, the latest OPEC+ meeting decided to maintain current production cuts into next year, which will help stabilize the market despite the surging supply. The source of these high exports is the ongoing drone attacks on Russian infrastructure, which adds significant geopolitical risk. This situation creates a volatile environment where supply could be disrupted suddenly. For this reason, strategies that take advantage of price spikes, like buying call options on Brent futures for the first quarter of 2026, may be beneficial. While the production drop in Kazakhstan is minor, it contributes to the overall uncertainty in the region. More immediately, the latest Energy Information Administration report showed an unexpected drop in U.S. crude inventories of 2.8 million barrels, indicating stronger demand than anticipated. This data supports maintaining long positions in WTI futures, especially as prices reach resistance near $92 per barrel.

Market Volatility and Risk Management

We recall the sharp rise in the CBOE Crude Oil Volatility Index (OVX) in late 2023, which highlighted how quickly markets can respond to perceived supply threats. This period reminds us that fundamental supply data can be quickly influenced by news events. Therefore, any bearish strategies should be hedged with out-of-the-money calls to safeguard against a sudden escalation in the conflict. Create your live VT Markets account and start trading now.

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