London, January 29, 2026, 11:46 GMT — Regular session
- Crude prices climb for a third straight day amid concerns over Middle East supply risks
- Cold-weather outages combined with a U.S. stock draw are tightening the near-term market
- Focus now turns to new OPEC+ cues and the upcoming U.S. inventory data
Brent crude futures surged over 2% on Thursday, briefly breaking above $70 a barrel—a peak not seen in four months—as traders factored in the threat of a U.S. military strike on Iran. “The immediate concern is … it closes the Strait of Hormuz,” said PVM analyst John Evans, referring to the critical channel that handles around 20 million barrels daily. By 1011 GMT, Brent had climbed $1.39, or 2.03%, to $69.79 a barrel, while U.S. West Texas Intermediate crude gained $1.37, or 2.17%, reaching $64.58. Citi noted the geopolitical premium had expanded by $3 to $4 a barrel and warned Brent could hit $72 if tensions escalate. 1
This shift is significant since the market no longer reacts solely to supply-demand fundamentals. Price spikes driven by geopolitical risks usually reflect insurance buying—investors paying a premium for the possibility that a rare event triggers an actual supply disruption.
Oil prices were already holding strong as the month closed. On Wednesday, Brent jumped 83 cents, or 1.23%, to settle at $68.40 a barrel, while WTI gained 82 cents, or 1.31%, closing at $63.21. That leaves Brent roughly 12% higher for January, with WTI up around 10% for the month. The U.S. Energy Information Administration reported a 2.3 million barrel drop in crude inventories last week, down to 423.8 million barrels, defying expectations for a 1.8 million barrel increase. UBS analyst Giovanni Staunovo called it “a solid report.” 2
This week’s supply story isn’t just about politics—it’s also about weather and outages. A winter storm slashed U.S. crude production by up to 2 million barrels per day over the weekend, pushing Gulf Coast crude exports to zero on Sunday, according to estimates and shipping data. “The cold weather … will likely cause quite significant drawdowns in oil stocks,” said PVM oil analyst Tamas Varga. Reuters also reported that OPEC+ plans to maintain its pause on output increases for March at its February 1 meeting. 3
On the physical side, signals are more muted. Saudi Arabia looks set to price its March official selling price (OSP) for Arab Light crude to Asia at a discount, marking the first time since December 2020, according to a Reuters survey of refiners. Dubai crude shifted into contango, meaning later shipments are pricier than prompt barrels, suggesting ample near-term supply despite futures reacting to risk headlines. The International Energy Agency predicts global supply will outpace demand by 4.25 million barrels per day in Q1. Saudi’s OSPs usually drop around the fifth of each month. 4
The divide is becoming impossible to miss. Futures prices factor in the risk of conflict, while refiners remain focused on the bottom line of barrels they can realistically ship.
The rally isn’t guaranteed to be steady. Should Gulf supplies hold steady and tensions between the U.S. and Iran ease, the risk premium could vanish in a matter of days rather than stretching into weeks.
Another key issue is the duration of weather-related losses. Storm outages eventually clear, repairs get underway, and the paper market tends to price in that rebound ahead of time.
Traders are watching Middle East developments closely, while also monitoring supply decisions from OPEC+. The next major data point on weather’s impact arrives with the U.S. Weekly Petroleum Status Report, scheduled for February 4. 5
