January WTI Crude Oil (CLF26) is down -0.91 (-1.51%), and January RBOB Gasoline (RBF26) is down -0.0279 (-1.52%) today.
Crude oil and gasoline prices are falling today, with gasoline falling to a 1-and-a-half-week low. The strength of the dollar today is undermining energy prices. Furthermore, the current weakness in stock prices weighs on confidence in the economic outlook and energy demand. Crude losses are limited due to expectations that restrictions on Russian energy exports will remain in place after Ukrainian President Zelenskiy said there was still no deal to end the Russo-Ukrainian war.
On the bearish side of crude, Saudi Arabia’s state producer Aramco last Thursday cut the price of its Arab Light crude for Asian customers by 30 cents/bbl for January delivery, the lowest since January 2021, a sign of weakening energy demand.
Geopolitical risks are supporting crude oil prices. Last Tuesday, Interfax reported that Russian President Putin threatened to attack ships of nations helping Ukraine if attacks on Russian ships do not stop. Recently, four Russian oil tankers have been attacked with drones in the Black Sea. Additionally, President Trump said that the airspace over Venezuela should be considered closed and that the United States could soon begin attacking drug cartels inside Venezuela. Venezuela is the twelfth largest oil producer in the world.
Reduced crude oil exports from Russia are propping up crude oil prices. On November 19, Vortexa data showed that Russia’s oil product shipments fell to 1.7 million bpd in the first 15 days of November, the lowest level in more than three years. Ukraine has attacked at least 28 Russian refineries in the past three months, exacerbating fuel shortages in Russia and limiting Russia’s crude oil export capabilities. Ukrainian drone and missile attacks over the weekend damaged a Russian oil terminal in the Baltic Sea, forcing it to shut down. The Caspian Pipeline Consortium, which transports 1.6 million bpd of Kazakhstan’s crude exports, was forced to shut down after a pipeline was damaged at one of its berths. New US and EU sanctions on Russian oil companies, infrastructure and tankers have also curbed Russian oil exports.
Crude also gained support after OPEC+ said on Sunday that it would stick with its plans to pause production increases during the first quarter of 2026. OPEC+, at its Nov. 2 meeting, announced that its members will increase production by +137,000 bpd in December, but will then pause production increases in the first quarter of 2026 due to the emerging global oil surplus. In mid-October, the IEA forecast a record global oil surplus of 4.0 million bpd by 2026. OPEC+ is trying to restore the entire 2.2 million bpd production cut it made in early 2024, but still has another 1.2 million bpd of output to restore. OPEC crude oil production in November fell -10,000 bpd to 29.09 million bpd.