WTI oil prices have recently risen due to fewer Russian fuel oil exports and supply issues in important US regions. In January, Russian shipments to Asia fell to about 1.2 million tons, marking three straight months of decline. Tensions in the Middle East persist as the US sends a carrier strike group, increasing worries over Iran. Lower exports from Venezuela to China, due to US actions against President Maduro, could further tighten the supply of high-sulphur fuel oil in Asia.

Geopolitical Influences on Oil Prices

Oil prices are holding steady because of US production issues and geopolitical risks, despite predictions of oversupply in 2026. The US deployment of an aircraft carrier to the Middle East raises concerns about possible disruptions to energy supplies. Trade tensions continue with President Trump threatening tariffs on Canada regarding deals with China, even though Canada has no plans for such agreements. Tariffs on Canada were only reduced in certain sectors. WTI oil, a high-quality crude from the US, plays a key role in global oil pricing. Its prices are affected by supply and demand, political factors, and OPEC decisions. Weekly oil inventory reports shape price trends, with API and EIA data highlighting supply-demand trends. OPEC’s production quotas can heavily influence WTI prices. WTI is showing strength, similar to what we saw in early 2025. Supply concerns from that time, especially disruptions in Russia and key US areas, continue to drive a bullish market sentiment. This provides a familiar base for our trading strategies as we approach February 2026.

Market Supply Concerns

The decline in Russian exports, beginning in late 2024 and continuing through 2025, remains crucial. Following recent drone attacks, industry reports now suggest that Russia’s crude processing is at an 11-month low, removing over 350,000 barrels per day of refining capacity. This ongoing pressure is tightening the global market for refined products. In the US, production is once again facing challenges, reminiscent of last year’s disruptions. The latest Energy Information Administration (EIA) report revealed a crude inventory drop of 4.2 million barrels last week, far surpassing analysts’ expectations of a 1.5 million barrel drop. This suggests recent winter storms in the Bakken formation have had a more significant impact on supply than expected. Geopolitical risks in the Middle East have also increased since the US earlier deployed a carrier group in 2025. Tensions with Iran have intensified, especially with recent naval exercises in the Strait of Hormuz, adding a risk premium to prices. Traders are closely monitoring this area, as any disruptions could quickly affect global energy flows. On the demand front, signals are stronger than they were last year. China’s latest Caixin Manufacturing PMI, released last week, unexpectedly rose to 51.1, indicating growth in factory activity for the third month in a row. This suggests a possible increase in energy consumption from the world’s largest oil importer. Given these ongoing supply issues and signs of rising demand, oil prices are likely to continue climbing. We believe buying call options to take advantage of this potential or establishing long futures positions could be beneficial in the coming weeks. Traders should stay vigilant for weekly US inventory data and any new developments from the Middle East. Create your live VT Markets account and start trading now.

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