OPEC+ oil production in December fell short by 720,000 barrels per day, with significant drops from Russia and Kazakhstan due to production issues. Ukrainian drone attacks on Kazakh export terminals have notably impacted output, indicating that the expected global oil oversupply may be smaller than many thought. The OPEC monthly report showed that oil production for December was 42.83 million barrels per day. Countries that had set targets produced 720,000 barrels less than agreed, primarily due to Russia’s larger shortfall. For the first time in a year, Kazakhstan’s production slipped below its target because of drone strikes on a key Black Sea export terminal.

Kazakhstan Production and Market Impacts

In early January, Kazakhstan’s oil output was reported to be 35% lower than its December average according to Reuters. Furthermore, three oil tankers near the export terminal were hit by drone attacks, which could help reduce the anticipated oil oversupply. This situation highlights the complicated nature of global oil supply and market behavior amid ongoing geopolitical tensions. OPEC+ production fell short of its December targets by about 720,000 barrels per day. The biggest contributions to this shortfall came from Russia and Kazakhstan, challenging previous assumptions of a well-supplied market. This gap in production suggests that the global oil surplus many expected for the first quarter of 2026 may not happen. The disturbances were primarily caused by ongoing Ukrainian drone attacks on important Kazakh export terminals in the Black Sea. This issue remains unresolved, as more attacks on tankers were reported this week. Consequently, Kazakh production in early January is already down sharply, showing a 35% drop from December’s average.

Geopolitical Tension and Market Reactions

This new geopolitical tension contrasts with recent market predictions. The U.S. Energy Information Administration had previously forecast that global production would exceed demand through early 2026. This forecast, which helped keep Brent crude prices around the low $80s, now appears to be in jeopardy. Traders may want to prepare for higher prices by taking long positions in WTI or Brent crude futures. The start of the conflict in 2022 added a significant risk premium to oil prices, and these recent attacks on energy infrastructure could do the same. The CBOE Crude Oil Volatility Index (OVX) has remained relatively low, suggesting that the market might not be fully accounting for this supply-side risk. Buying call options could be a good strategy to profit from a potential sharp price increase while managing risk. Another strategy involves calendar spreads—buying a March 2026 contract while selling a June 2026 contract. If these supply disruptions lead to immediate shortages, the price of the front-month contract may rise faster than that of later contracts, a scenario known as backwardation. This approach allows for speculation on the evolving structure of the futures market. Create your live VT Markets account and start trading now.

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