Crude Oil Prices Bolstered Amid Ongoing Concerns Over Iran

Crude Oil and Gasoline Prices Edge Higher

February WTI crude oil futures have climbed by 1.20% today, while February RBOB gasoline contracts are up 0.76% as both markets rebound from Thursday’s steep declines.

Today’s upward movement in crude and gasoline prices is partly attributed to ongoing geopolitical tensions in Iran, which continue to lend support to the energy markets. Although the likelihood of an immediate U.S. response to the unrest in Iran has diminished, the United States is nonetheless increasing its military presence in the Middle East.

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As the weekend approaches, traders are covering short positions in crude futures, which is helping to bolster prices. Heightened instability in Iran remains a key factor, even though the immediate threat of U.S. military action has lessened. Reports indicate that the U.S. is deploying an aircraft carrier strike group and additional military resources to the region in the near future.

Widespread protests in Iran, OPEC’s fourth-largest oil producer, are also providing upward pressure on crude prices. Demonstrations against government policies have led to significant unrest and a severe economic downturn. Iranian security forces have reportedly killed thousands of demonstrators, and former President Trump has warned of potential military action if the violence continues. Additionally, some U.S. personnel have been instructed to leave the Al Udeid Air Base in Qatar, which was previously targeted by Iranian strikes following U.S. attacks on Iran’s nuclear sites. Iran produces over 3 million barrels of oil per day, and any escalation in protests or foreign intervention could disrupt this output.

Further supporting crude prices, recent drone strikes on oil tankers near the Caspian Pipeline Consortium terminal on Russia’s Black Sea coast have nearly halved crude shipments from the facility, reducing loadings to approximately 900,000 barrels per day.

According to Vortexa, the amount of crude oil stored on tankers stationary for at least a week dropped by 0.3% to 120.9 million barrels in the week ending January 9.

Additional Market Drivers

Robust demand from China is also contributing to firmer crude prices. Data from Kpler shows that China’s crude imports are projected to rise by 10% month-over-month in December, reaching a record 12.2 million barrels per day as the country rebuilds its reserves.

Crude prices received a boost after OPEC+ announced on January 3 that it would maintain its decision to pause production increases during the first quarter of 2026. Although OPEC+ had previously agreed to raise output by 137,000 barrels per day in December, the group will halt further increases in early 2026 due to expectations of a significant global oil surplus. The International Energy Agency (IEA) forecasted in October that the surplus could reach 4 million barrels per day in 2026. OPEC+ is working to restore the 2.2 million barrels per day in cuts made in early 2024, with 1.2 million barrels per day still to be reinstated. OPEC’s crude production in December increased by 40,000 barrels per day to 29.03 million barrels per day.

Meanwhile, Ukrainian drone and missile strikes have hit at least 28 Russian refineries over the past four months, restricting Russia’s ability to export crude and tightening global supplies. Since late November, Ukraine has intensified attacks on Russian tankers, with at least six vessels targeted in the Baltic Sea. New sanctions from the U.S. and EU on Russian oil companies, infrastructure, and tankers have further limited Russian exports.

Last month, the IEA projected that the global crude surplus will expand to a record 3.815 million barrels per day in 2026, up from over 2 million barrels per day in 2025, the highest level in four years.

The U.S. Energy Information Administration (EIA) on Tuesday raised its forecast for 2026 U.S. crude output to 13.59 million barrels per day, up from 13.53 million barrels per day previously, while lowering its estimate for 2026 U.S. energy consumption to 95.37 quadrillion BTUs from 95.68.

The EIA’s latest report, released Wednesday, revealed that as of January 9, U.S. crude inventories were 3.4% below the five-year seasonal average, gasoline stocks were 3.4% above average, and distillate inventories were 4.1% below average. U.S. crude production for the week ending January 9 slipped by 0.4% to 13.753 million barrels per day, just under the all-time high of 13.862 million barrels per day set in early November.

Baker Hughes reported last Friday that the number of active U.S. oil rigs fell by three to 409 in the week ending January 9, slightly above the 4.25-year low of 406 rigs recorded in December. Over the past two and a half years, the U.S. rig count has dropped sharply from a 5.5-year high of 627 rigs in December 2022.