Dollar Strength and Smaller Global Supplies Lift Crude Oil Prices

February WTI crude oil (CLG26) today is up +0.94 (+1.58%), and February RBOB gasoline (RBG26) is up +0.0354 (+1.98%).

Crude oil and gasoline prices recovered from early losses today and rallied sharply after the dollar index (DXY00) tumbled to a 2-week low.  Also, reduced global crude supplies are supporting oil prices after Kazakhstan’s largest oil producer shut production after fires at the Tengiz and Korolev oil fields.

Crude is rallying today after Reuters reported that Kazakhstan’s Tengiz and Korolev oil fields will be shuttered for another 10 days due to fires at power generators.  Kazakhstan has curbed some 900,000 bpd of crude production that feeds the Caspian Pipeline Consortium terminal on Russia’s Black Sea Coast due to drone strikes.

Unrest in Iran, OPEC’s fourth-largest producer, is also underpinning crude prices as thousands of protesters have taken to the streets in many cities of Iran to protest government policies that have triggered a currency crisis and economic collapse.  Iranian security forces have killed thousands of protesters, and President Trump threatened attacks on Iranian government installations if the killing of protesters continues.  Reuters reported last Wednesday that some US personnel have been advised to leave the US Al Udeid Air base in Qatar.  The facility was targeted by Iran in retaliatory airstrikes last year after the US attacked Iran’s nuclear facilities.  Iran, OPEC’s fourth-largest producer, produces more than 3 million bpd, and its crude production could be disrupted if the protests against the government worsen and the US decides to strike government targets.

Vortexa reported Monday that crude oil stored on tankers that have been stationary for at least 7 days fell -8.6% w/w to 115.18 million bbl in the week ended January 16.

Strength in Chinese crude demand is supportive for prices.  According to Kpler data, China’s crude imports in December are set to increase by 10% m/m to a record 12.2 million bpd as it rebuilds its crude inventories.

Crude garnered support after OPEC+ on January 3 said it would stick to its plan to pause production increases in Q1 of 2026.  OPEC+ at its November 2025 meeting announced that members would raise production by +137,000 bpd in December, but will then pause the production hikes in Q1-2026 due to the emerging global oil surplus.  The IEA in mid-October forecasted a record global oil surplus of 4.0 million bpd for 2026.  OPEC+ is trying to restore all of the 2.2 million bpd production cut it made in early 2024, but still has another 1.2 million bpd of production left to restore.  OPEC’s December crude production rose by +40,000 bpd to 29.03 million bpd.