ICE Brent is close to $70/bbl. Prices are being supported by uncertainty over Iran and OPEC+ output cuts, even after a large rise in US crude stocks. Refinery margins also strengthened after reports that a Ukrainian drone hit Lukoil’s Volgograd refinery in Russia, which has 300k b/d of capacity.
OPEC kept its demand growth forecasts unchanged for 2026 and 2027 at 1.38m b/d and 1.34m b/d. OPEC+ output fell by 439k b/d month on month in January to 42.45m b/d.
Kazakhstan Supply Recovery
Kazakhstan’s oil output is expected to recover through February after power problems at the Tengiz and Korolev fields were fixed. Repairs at the CPC terminal should also increase loadings.
February CPC loadings are forecast at 1.15–1.25m b/d, up from 907k b/d in January. March loadings are expected at 1.55–1.65m b/d.
Canadian crude discounts have widened. Indian demand is also shifting away from Russian barrels after the US–India trade deal. A key market driver will be how much India cuts purchases, and how much Russia can reroute to other buyers.
We expect oil prices to find strong support, with ICE Brent now testing $70 per barrel. The market appears to be looking past bearish signals, including the 12.1 million barrel build in US crude inventories reported by the EIA for the week ending February 6. Geopolitical risks—ranging from Iran uncertainty to drone strikes on Russian refineries—are the main driver right now. This makes bullish option strategies, such as call spreads, more appealing.
Positioning And Risk Management
Looking ahead, OPEC remains confident in demand growth this year, which helps support longer-dated futures. Its commitment to supply control was clear last month. January 2026 data showed very strong compliance with production cuts, at 115%. This high level of discipline is a key reason prices have rebounded from the dips seen in Q4 2025.
That said, traders should be ready for new supply to reach the market soon. Exports from Kazakhstan’s CPC terminal should recover this month and jump in March to above 1.5 million barrels per day. This planned supply increase could cap the current rally. Selling out-of-the-money calls or buying protective puts may be a sensible hedge.
Another key point to watch is Indian demand for Russian oil after the recent US–India trade agreement. If India cuts purchases sharply, Russia may need to find other buyers, likely at a discount. That could add unexpected downward pressure later this year and affect longer-term positions.
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