Oil prices first fell after indirect US–Iran talks in Oman lowered fears of a US strike on Iran, reducing the geopolitical risk premium. Prices later recovered as markets refocused on supply risks.
Kazakhstan may export 35% less oil than planned this month if output at the Tengiz field recovers slowly. Reuters reported that daily exports via the CPC pipeline and its Black Sea terminal could be about 1.1 million barrels per day, down from an intended 1.7 million.
Supply Risks Take Center Stage
Another support for prices is the prospect that India may cut oil imports from Russia as part of a bilateral trade agreement with the US. In December, India imported 1.1–1.2 million barrels per day from Russia, which would then need to be sourced elsewhere.
If India reduces purchases, Russia may have to offer larger discounts and rely more on ships from its shadow fleet. The European Commission plans to ban the transport of Russian oil in tankers from EU countries in its 20th sanctions package.
The article was produced using an AI tool and checked by an editor.
The initial relief from US-Iran talks seems to be a temporary distraction for the market. While that geopolitical risk premium has eased, we are now looking at fundamental supply issues taking center stage. With WTI crude recently pushing past $88 per barrel, the focus has shifted from potential conflict to actual barrels being taken off the market.
Market Positioning For Higher Prices
The disruption in Kazakhstan is a significant factor that we cannot ignore. Reports now confirm that January exports via the CPC pipeline were down by nearly 500,000 barrels per day, tightening the supply of light sweet crude. This isn’t a short-term glitch, as the sluggish recovery at the Tengiz field suggests this problem could linger through the first quarter.
We are also seeing a major shift in trade flows as India begins to reduce its reliance on Russian oil. Tanker tracking data shows India’s imports from Russia fell below 900,000 barrels per day last month, a notable drop from the average of 1.2 million barrels we saw throughout much of 2025. This forces India to compete for barrels from other suppliers, adding to upward price pressure on global benchmarks.
Given this tightening outlook, volatility in the coming weeks is likely to increase as the market prices in these supply realities. The latest EIA report supports this view, forecasting a global supply deficit of over 400,000 barrels per day for this quarter. This environment suggests that buying call options or establishing bull call spreads on April or May contracts could be a prudent way to position for further price increases.
