Insights 
VT 
Russian oil exports have stayed at a high level, with seaborne crude shipments recorded at 3.7 million barrels per day in the last reporting week. The four-week average has risen to 3.82 million barrels per day, the highest since May 2023, according to Bloomberg data.
The ongoing Ukrainian drone attacks on Russian oil refineries are contributing to the availability of more crude oil for export. These attacks have also affected Kazakhstan, leading to a short-term reduction in oil production.
Kazakhstan Production Impact
This production decrease in Kazakhstan is anticipated to be minimal and temporary. Kazakhstan typically produces more crude oil than its OPEC+ agreement stipulates, so the recent production dip is unlikely to cause any substantial impact.
Russian seaborne crude exports are at their highest level since May 2023, with the four-week average hitting 3.82 million barrels per day. This high volume, resulting from reduced domestic refining capacity, should exert some downward pressure on crude prices. However, we note that the most recent OPEC+ meeting resulted in an agreement to maintain current production cuts into the new year, which will support the market against this excess supply.
The underlying cause of these high exports is ongoing drone attacks on Russian infrastructure, a factor that introduces significant geopolitical risk. This situation creates a volatile environment where supply could be disrupted far more severely on short notice. Given this, we see value in strategies that benefit from price spikes, such as purchasing call options on Brent futures contracts for the first quarter of 2026.
While the related production impairment in Kazakhstan is minor, it adds to the general uncertainty in the region. More importantly for the immediate trend, the latest Energy Information Administration report showed a surprise draw in U.S. crude inventories of 2.8 million barrels, suggesting stronger than expected demand. This data supports holding tactical long positions in WTI futures, as prices test resistance near $92 per barrel.
Market Volatility and Risk Management
We remember the sharp increase in the CBOE Crude Oil Volatility Index (OVX) back in late 2023, which showed how quickly markets can react to perceived supply threats. That period serves as a reminder that fundamental supply figures can be overridden by headline risk. Therefore, any bearish strategies should be hedged with out-of-the-money calls to protect against a sudden escalation in the conflict.
