Oil prices have risen, with ICE Brent ending the day more than 1.4% higher, now above $65 per barrel. This market strength is driven by refined products, as gasoline and gasoil cracks are up due to supply worries. **Ongoing Geopolitical Tensions** The continuous drone strikes from Ukraine on Russian refineries are raising concerns in the market, especially regarding middle distillates. US sanctions on LukOil and Rosneft, which impact refining assets outside Russia, add to these worries. Russian crude oil flows are now uncertain due to these sanctions. Recent data shows a decline, with a four-week average at its lowest since mid-September and reduced shipments to China and India. However, many Russian seaborne shipments do not have known destinations and might still end up in India or China. OPEC will soon release its monthly oil market report, offering predictions up to 2026. Meanwhile, the Energy Information Administration (EIA) will publish its Short-Term Energy Outlook, including forecasts for US oil and gas supply. The American Petroleum Institute will also share weekly US crude and refined product inventory figures, which have been delayed because of a public holiday. Brent crude remains above $65 per barrel, but real strength is evident in refined products like gasoline and gasoil. The 3:2:1 crack spread, an important measure of refinery profitability, is stable above $35 per barrel, a level not seen since summer. This points to greater concern about fuel availability rather than the actual supply of crude oil. Ongoing Ukrainian drone strikes on Russian refineries keep the product markets very tight, creating bullish pressure. These events remind us of similar disruptions in early 2024, and any further escalation could push diesel and gasoline prices even higher. Currently, these supply risks are overshadowing a generally bearish outlook for crude itself. **Russian Export Data Under Scrutiny** Russian seaborne crude exports are estimated to drop to about 3.2 million barrels per day, but this data is becoming less trustworthy. A large portion of these barrels are on tankers with unknown destinations, characteristic of the shadow fleet that ultimately supplies buyers in Asia. This creates a gap between official tracking data and the actual supply hitting the market. Today’s reports from OPEC and the EIA will be crucial for setting market direction for the rest of the year. We will be monitoring the typical differences between the two reports, with the EIA likely highlighting robust US shale output, which has recently exceeded 13.5 million barrels per day. Any unexpected downward adjustments in demand from either agency could temporarily slow down this rally. Given the disconnect between strong product demand and weaker crude prices, traders should consider positioning for wider crack spreads. This could mean going long on gasoline or diesel futures while shorting Brent or WTI futures. This strategy focuses on refining margins, which are currently driving the market. For those aiming to trade crude’s outright price, the high level of uncertainty suggests using options to limit risk. Buying Brent call spreads for January 2026, likely targeting the $70-$75 range, provides a chance to profit from potential upsides while controlling costs. The upcoming API inventory data will be a crucial next step, and another decrease in product stockpiles would support this expectation. Create your live VT Markets account and start trading now.

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