Oil prices have risen amid US–Iran nuclear talks and Iranian military exercises, as markets factor in the risk of escalation. Oil prices are still around 10% higher than at the beginning of the year, despite a recent fall.
OPEC+ is considering restarting production increases from April as demand is expected to strengthen in the second quarter. A decision is due at a meeting of eight countries on 1 March.
Opec Supply Limits
Even if targets rise, actual output may grow by less than agreed because of structural limits, outages, and sanction-related disruptions. An S&P Global Energy (Platts) survey found that in January, OPEC+ countries bound by targets produced only 1.6 million barrels per day more than in March 2025, before the expansion began.
Russian exports are also a constraint, with the risk of lower production if alternative buyers are not found to replace weaker demand from India. Kpler data shows India is set to import 1.16 million barrels per day of Russian oil in February, with volumes expected to decline in the coming months.
Geopolitical risks, particularly around Iran, are keeping oil prices elevated as we factor in the possibility of supply disruptions. This uncertainty suggests that buying call options could be a prudent way to position for any sudden price spikes in the coming weeks. The tension is creating a floor under the market that is difficult to ignore.
We are all watching the OPEC+ meeting on March 1st, where a decision on raising production targets for April will be made. However, we remember that during much of 2025, the group’s actual output consistently fell short of its paper quotas. This history suggests any announced increase might not fully translate into real barrels hitting the market.
Quota Compliance Gap
The gap between agreed-upon quotas and actual production remains a key structural issue supporting prices. Recent industry data for January 2026 showed the participating OPEC+ nations collectively underproduced their targets by nearly 1.8 million barrels per day (bpd). This ongoing struggle with capacity constraints and operational issues severely limits the group’s ability to cool down the market.
We also see Russia facing real challenges, as its ability to find alternative buyers for oil once destined for India is in question. While February’s import data for India was initially forecast at 1.16 million bpd, recent tanker tracking shows a sharp decline in loadings for the latter half of the month, with flows now trending closer to 850,000 bpd. This points to a potential forced production cut from Russia, further tightening global supply.
These combined supply constraints argue against any significant price decline in the near term. For derivative traders, this suggests that strategies built around a stable or rising price floor could be favorable. Selling put options to collect premium on the belief that prices will not fall below a certain level appears to be a viable approach.
