Oil surged 3% as US winter storms cripple output and Mideast risks mount

Crude futures rallied sharply on Tuesday, underpinned by severe winter storms in the US that knocked out significant production capacity and temporarily halted exports. Lingering supply constraints in Kazakhstan and heightened geopolitical tensions provided further support.

Brent crude futures settled up $1.98, or 3.02%, at $67.57/barrel.

WTI crude settled up $1.76, or 2.9%, to $62.39/barrel.

The steep advance was driven by reports that US producers lost up to 2 million barrels per day—roughly 15% of national output—over the weekend as freezing temperatures strained energy infrastructure. Exports from the US Gulf Coast tumbled to zero on Sunday, though flows began to rebound above seasonal norms by Monday as ports reopened. 

Supply tightness was further exacerbated by slower-than-expected recovery efforts in Kazakhstan. The massive Tengiz oilfield is projected to restore less than half of its normal production by 7 February following recent power outages, keeping the market tighter than anticipated. 

Sentiment remained buoyed by an elevated geopolitical risk premium. The arrival of a US naval armada in the Middle East and expanded military capabilities directed at Iran have reinforced a floor under crude prices. Market participants are also eyeing the upcoming OPEC+ meeting on 1 February, where delegates have signaled the group will likely extend its pause on output increases through March.

Written by: Aiman Haikal