## Geopolitical Tensions and Strong Data Drive Oil Prices Higher Today

The energy market is experiencing a period of heightened volatility driven by multiple factors. Oil prices today show significant movements, with February WTI futures up by 3.10% and RBOB gasoline contracts rising by 2.00%. Both instruments have reached their monthly highs, reflecting a confluence of upward pressures from both supply and demand sides.

### Geopolitical Drivers and the Iran Effect

Increasing instability in the Iranian region is the main catalyst for the energy rally. With Iran producing over 3 million barrels per day—a significant share in the OPEC mix—any escalation poses a real risk to the global supply balance. Rising protests and related government countermeasures have fueled fears of supply disruptions, while the international community, including U.S. leadership, closely monitors the situation's development.

### Support from U.S. Economic Fundamentals

Meanwhile, economic indicators in the United States continue to surprise positively. The December unemployment rate fell to 4.4%, beating analysts' forecasts, while the University of Michigan's consumer confidence for January reached 54.0. These data support the hypothesis of more resilient energy demand in the short term. Additionally, the refinery crack spread hit its highest in three weeks, encouraging refineries to increase crude oil purchases to boost fuel production.

Notably, technical pressure from the annual rebalancing of major indices is also at play: according to Citigroup, the BCOM and S&P GSCI indices could trigger inflows of about $2.2 billion into oil futures next week.

### Contrasting Winds: Global Surplus Forecasts

Despite the bullish momentum, significant bearish factors remain. Saudi Arabia has further reduced the price of its Arab Light for the third consecutive month, signaling concerns about weaker medium-term demand. Morgan Stanley has revised its estimates, predicting a broader global oil surplus that could peak around mid-year. The bank's new forecasts now indicate an average crude price of $57.50 per barrel in Q1 and $55 in Q2, both lower than previous estimates of $60.

### Global Supply Scenario

OPEC+ has confirmed a cautious stance, maintaining a pause on production increases until the first quarter of 2026. Although the group increased output by 137,000 barrels per day in December, further hikes remain suspended given the expected global surplus. OPEC is gradually reintegrating cuts made at the start of 2024, with 1.2 million barrels per day still to be restored. OPEC's total production in December grew by 40,000 barrels per day, reaching 29.03 million barrels per day.

### Critical Dynamics to Watch

Vortexa data show a weekly reduction of 3.4% in stored crude on floating tankers, down to 119.35 million barrels as of January 2. Meanwhile, China maintains strong demand: according to Kpler, December Chinese oil imports are expected to increase by 10% month-over-month, reaching a record 12.2 million barrels per day, supported by the replenishment of national reserves.

Russian export restrictions continue to weigh on global availability. Ukrainian attacks have targeted at least 28 Russian refineries over the past four months, and US and EU sanctions have further compressed Russian flows, reducing a significant component of global supply.

### US Production Front

EIA has raised its US crude oil production estimates for 2025 to 13.59 million barrels per day. Weekly production as of January 2 stood at 13.811 million barrels per day, slightly below the record reached in November. The number of active oil rigs in the US increased to 412 in the week ending January 2, recovering from multi-year lows and suggesting a potential increase in extraction activity.

US crude stocks remain 4.1% below the five-year seasonal average, while gasoline inventories exceed the average by 1.6%, and distillate stocks are 3.1% below.

### Outlook and Forecasts

IEA forecasts depict a scenario with a record surplus of 3.815 million barrels per day in 2026, with already significant projections of over 2 million per day for 2025. OPEC has revised upward its estimates for Q3, now expecting a surplus of 500,000 barrels per day compared to the previous forecast of a 400,000 barrel deficit.

The current oil price landscape remains trapped between bullish pressures related to geopolitical tensions and solid US economic data, and bearish pressures stemming from prospects of abundant supply in upcoming quarters. Volatility is likely to continue characterizing energy markets in the short term.