Oil prices first fell after indirect US–Iran talks in Oman eased fears of a US strike on Iran. That reduced the geopolitical risk premium. Prices later rebounded as traders shifted their focus back to supply risks.
Kazakhstan may export 35% less oil than planned this month if output at the Tengiz field recovers slowly. Reuters said daily exports through the CPC pipeline and its Black Sea terminal could average about 1.1 million barrels per day, down from the planned 1.7 million.
Supply Risks Take Center Stage
Prices are also getting support from the possibility that India could cut oil imports from Russia as part of a bilateral trade deal with the US. In December, India imported about 1.1–1.2 million barrels per day from Russia. If those barrels disappear, India would need to replace them elsewhere.
If India buys less, Russia may have to offer deeper discounts and depend more on ships from its shadow fleet. The European Commission also plans to ban the transport of Russian oil on tankers from EU countries as part of its 20th sanctions package.
The article was produced using an AI tool and checked by an editor.
The market’s initial relief after the US–Iran talks now looks temporary. The geopolitical risk premium has faded, but supply fundamentals are taking over. With WTI recently moving above $88 per barrel, attention has shifted from the risk of conflict to real barrels being removed from the market.
Market Positioning For Higher Prices
Disruption in Kazakhstan is a major factor. Reports now show that January exports through the CPC pipeline were down by nearly 500,000 barrels per day, tightening supplies of light sweet crude. This does not look like a quick fix. The slow recovery at Tengiz suggests the issue could last into the first quarter.
Trade flows are also shifting as India starts to reduce its reliance on Russian oil. Tanker tracking data shows India’s imports from Russia fell below 900,000 barrels per day last month, down from an average near 1.2 million barrels per day across much of 2025. That forces India to compete for barrels from other suppliers, which adds upward pressure to global benchmark prices.
With supply tightening, volatility is likely to rise in the weeks ahead as the market prices in these constraints. The latest EIA report supports this view, forecasting a global supply deficit of more than 400,000 barrels per day this quarter. In this setting, buying call options or using bull call spreads on April or May contracts could be a sensible way to position for further price gains.
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