Morning Highlights: Oil Hits Late-September Highs on U.S. Storm, Weak Dollar; Gulf Exports Hit Zero Sunday

Wednesday, January 28, 2026

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MARKET SNAPSHOT

Oil reached its highest level since late September before retreating slightly in early trading. Brent fell $0.13 to $67.44/bbl, while WTI dropped $0.02 to $62.37/bbl as of 6:30 AM EST, after both hit multi-month highs overnight.

Winter storm disruption of U.S. crude output, weak U.S. dollar (hovering near four-year lows), and continued Kazakh outages combined to push prices to their highest levels in four months.

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TOP DEVELOPMENTS

U.S. Gulf Coast Crude Exports Hit ZERO on Sunday

Unprecedented Disruption: Exports of crude oil from U.S. Gulf Coast ports tumbled to zero on Sunday before rebounding Monday, after the massive winter storm swept across the country, ship-tracking service Vortexa said.

This is an extraordinary data point demonstrating the severity of Winter Storm's impact. The Gulf Coast handles the majority of U.S. crude exports, and a complete halt, even for one day, is highly unusual. Combined with the 2 million bpd peak production outage Saturday, this represents the most severe weather-related supply disruption in recent memory.

Weak Dollar Provides Additional Support

The U.S. dollar is hovering near four-year lows against a basket of other currencies, making dollar-denominated commodities like oil cheaper for those holding other currencies. This creates additional buying support from international buyers.

The weak dollar is a meaningful tailwind that compounds the supply disruption narrative. If the dollar continues weakening, it could provide a floor under prices even as supply normalizes.

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KAZAKHSTAN: ENERGY MINISTER TARGETS FULL PRODUCTION WITHIN A WEEK

Ambitious Timeline: Kazakhstan said Wednesday it was restarting the vast Tengiz oil field in stages and would try to reach full production within a week after three transformers burned down, costing the country at least 7.2 million barrels of output.

Minister's Statement: Energy Minister Yerlan Akkenzhenov said the adjacent Korolev field had been launched two days ago, but relaunching Tengiz was a complex affair after three out of 30 transformers burned down.

"Three of them have burned down - this is critical equipment," Akkenzhenov told reporters in Astana. Asked directly if he was signaling the field would reach capacity of around 900,000 barrels per day within a week, he said: "Yes. We will try."

"We have restored some of the work of these transformers and now the field is being launched in stages. The first gas has already appeared, so I think the entire Tengiz will be launched in stages within a week. Maybe even earlier."

Reality Check: Sources have said this might take longer than the minister's optimistic timeline. Industry sources previously described volume as "still low" despite official pronouncements of resumption.

CPC Status: Pipeline operator CPC, which handles about 80% of Kazakhstan's oil exports, has restored full loading capacity at its Black Sea terminal after maintenance at a mooring point hit by drones.

The 7.2 million barrel production loss quantifies the outage impact. At 900,000 bpd capacity, an 8-day outage would account for this loss (900K × 8 = 7.2M). The minister's "within a week" target suggests he's aiming for near-term full restoration, but the "sources say it might take longer" caveat and previous "gradual" language suggest caution. The problems at Tengiz represent yet another setback for Kazakhstan, the world's 12th largest producer, whose main export route was already limited by Ukrainian naval drone attacks on CPC.

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VENEZUELA: GENERAL LICENSE COMING TO LIFT SOME SANCTIONS

Significant Development: U.S. officials are working to issue a general license that would lift some sanctions on Venezuela's energy sector, sources said, which could weigh on prices.

Major Shift: A general license would formalize and expand the current arrangement where specific companies (Vitol, Trafigura, Chevron) have individual licenses. This could open Venezuelan supply to a broader range of buyers and increase flows beyond the current 50 million barrels being marketed.

This represents another step toward full Venezuelan supply normalization, adding to the bearish fundamental case. Combined with Valero and Phillips 66 already receiving cargoes at $8.50-$9.50/bbl Brent discounts, Venezuelan barrels are actively adding to global supply.

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IRAN: CARRIER STRIKE GROUP DEPLOYED

A U.S. aircraft carrier and supporting warships have arrived in the Middle East, U.S. officials told Reuters, adding to Trump's capabilities to defend U.S. forces or potentially take military action against Iran, OPEC's fourth-biggest crude producer.

The strike group's arrival was reported Monday. This confirms the deployment is complete and assets are in theater. However, without actual escalation beyond positioning, markets are treating this as background risk rather than imminent disruption.

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BOTTOM LINE

Oil hit its highest level since late September on a confluence of bullish factors: U.S. Gulf Coast exports literally hit zero Sunday (unprecedented), 2 million bpd peak production outage, weak dollar at four-year lows, and Kazakh outages removing 900,000 bpd. However, the rally is already showing signs of exhaustion with early pullback today. Kazakhstan's energy minister targeting full Tengiz production within a week (though sources say longer) means 900,000 bpd returns soon. U.S. production is already recovering rapidly (full restoration expected Thursday per yesterday's brief). Gulf Coast exports rebounded Monday, suggesting the zero-export day was a one-off. The general license for Venezuelan energy sector would formalize and expand supply additions. OPEC+ extending the March pause is defensive, not bullish - preventing surplus from widening, not eliminating it. Brent at $67.44 has breached Phillip Nova's $67 ceiling and is testing the upper bound of the expected range. WTI at $62.37 is well above most analysts' comfort zones. The weak dollar provides genuine support, but temporary supply disruptions are being priced as if permanent. The fundamental reality hasn't changed: IEA's 3.69 million bpd surplus, Goldman's path to $54 Q4, Venezuelan general license coming, Tengiz returning within a week, U.S. production normalizing Thursday. This rally feels like a classic weather-driven overshoot. The zero Gulf Coast exports Sunday is dramatic but was one day. The 7.2 million barrel Kazakh loss is real but will be recovered within weeks. Once supply normalizes next week, attention will return to the massive surplus, weak demand growth, and inventory builds. Brent above $67 and WTI above $62 look vulnerable to profit-taking. The trend remains lower once the weather premium fades. This may be the selling opportunity the market has been waiting for.