Oil Market Analysis - February 25, 2026

Crude Oil Inventory Surge

Recent data from the Energy Information Administration (EIA) has revealed a significant increase in crude oil inventories, which has surpassed market expectations. The report indicates a build of 15.99 million barrels, while analysts had anticipated only a 1.2 million barrel increase. This unexpected surge has led to a 1% decline in West Texas Intermediate (WTI) crude prices, which are currently trading at $64.22.

Inventory Breakdown

• Crude Oil Inventories: +15.99 million barrels (Expected: +1.2 million barrels)
• Gasoline Inventories: -1.01 million barrels (Expected: -0.6 million barrels)
• Distillate Inventories: +0.25 million barrels (Expected: -1.9 million barrels)
• Cushing Inventories: +0.88 million barrels
• Refinery Utilization: fell by 2.4 percentage points (Expected: +0.5 percentage points)
• US Crude Production: steady at approximately 13.5 million barrels per day (down by 33,000 bpd)

Despite the increase in inventories returning to levels seen last year, they remain significantly below the five-year average. However, the current trends suggest that the market is facing a substantial oversupply.

Market Commentary: Geopolitical Risks vs. Oversupply

The oil market is currently caught between geopolitical tensions and the reality of oversupply. The geopolitical risk premium, primarily driven by escalating tensions with Iran, is estimated to add between $3 and $10 per barrel to oil prices. President Donald Trump has intensified his rhetoric against Iran, accusing the nation of pursuing "sinister" nuclear ambitions, which raises concerns about potential disruptions in the Strait of Hormuz, a critical passage for global oil transport.

While there are fears of a price spike above $100 per barrel, Trump's recent statements during his State of the Union address suggest a preference for negotiating a deal with Iran, rather than escalating military conflict.

On the flip side, the physical market fundamentals are weakening, as evidenced by the EIA report indicating a significant build in crude inventories. Countries like Russia and Iran are reportedly slashing prices to offload excess crude, offering discounts of $11–$12 per barrel to China. Additionally, the diminishing focus on "Net Zero" policies among global leaders is shifting towards increasing production, which may keep WTI prices in check in the medium term, provided that no military conflict arises.