OPEC+ oil production in December fell short by 720,000 barrels per day, with significant contributions from Russia and Kazakhstan due to disruptions. Ukrainian drone attacks on Kazakh export terminals have notably reduced production, suggesting that global oil oversupply might be less than previously anticipated.
The OPEC monthly report indicated that December’s oil production was 42.83 million barrels per day. Countries bound by targets produced 720,000 barrels per day less than agreed, with Russia experiencing the largest shortfall. Kazakhstan’s production fell below target for the first time in a year due to drone attacks on a key Black Sea export terminal.
Kazakhstan Production and Market Impacts
Kazakhstan’s oil output in early January was 35% below its December average, as reported by Reuters. Additionally, three oil tankers near the export terminal were targeted by drones, potentially lowering the anticipated oversupply in the oil market. This situation underscores complexities in global oil supply and market dynamics amidst geopolitical tensions.
We are seeing that OPEC+ production fell well short of its targets last month in December 2025, missing by about 720,000 barrels per day. The biggest shortfalls came from Russia and Kazakhstan, challenging the consensus view of a well-supplied market. This production gap suggests the global oil surplus many had anticipated for the first quarter of 2026 might not materialize.
The disruption is largely due to ongoing Ukrainian drone attacks on key Kazakh export terminals in the Black Sea. This is not a resolved issue, as more attacks on tankers were reported just this week. As a result, Kazakh production in the first part of January is already down a sharp 35% from December’s average.
Geopolitical Tension and Market Reactions
This new geopolitical tension clashes with recent market forecasts, as the U.S. Energy Information Administration’s latest outlook had projected global production would continue to outpace demand through early 2026. That forecast, which helped keep Brent crude prices hovering in the low $80s, now appears to be at risk. Traders should therefore consider positioning for higher prices, perhaps by acquiring long positions in WTI or Brent crude futures.
We saw how the conflict’s start back in 2022 added a significant risk premium to oil, and these fresh attacks on energy infrastructure could do the same. The CBOE Crude Oil Volatility Index (OVX) has been relatively subdued, suggesting the market may be under-pricing this supply-side risk. Buying call options is an attractive strategy to profit from a potential sharp upward move while defining your maximum risk.
Another approach is to look at calendar spreads, such as buying a March 2026 contract while selling a June 2026 contract. If these supply disruptions create an immediate shortage, the front-month contract price could rise faster than later months, a condition known as backwardation. This strategy allows for a play on the changing structure of the futures curve.
