Crude oil and gasoline prices surged on Tuesday, reaching multi-week highs. Heightened tensions with Iran, drone attacks on oil tankers, and unrest in Iran all contributed to the rally. Additionally, upcoming annual commodity index rebalancing will result in significant oil contract purchases.

OPEC+ announced it would pause production increases in Q1 2026 due to a global oil surplus. The IEA forecasts a record surplus of 4.0 million bpd for 2026. Ukrainian attacks on Russian refineries and tankers, as well as new US and EU sanctions on Russian oil exports, have impacted global oil supplies.

The EIA increased its 2026 US crude production estimate to 13.59 million bpd and reduced its energy consumption estimate. The consensus for the upcoming EIA crude inventories report is a decline in crude stocks and an increase in gasoline supplies.

Recent EIA data showed US crude oil inventories below the 5-year average, while gasoline inventories were above and distillate inventories were below average. US crude oil production remained near record highs.

Baker Hughes reported a decrease in active US oil rigs, nearing a 2.5-year low. The decline in rigs reflects the ongoing challenges in the oil industry.

Read more at Yahoo Finance: Geopolitical Risks Underpin Crude Oil Prices