Russian diesel shifted from being the main bullish driver in global middle distillate markets in 2025 to a dominant bearish force by early 2026, reversing a year-long rally in refining margins. The European diesel crack spread rose from $16.7 per barrel in early January 2025 to $34.17 per barrel in November, as Russian supplies — structurally weak since the start of the war — tightened to acute shortage levels. That tightness has since eased, with the average crack spread falling to $21.7 per barrel in January 2026. Refinery maintenance, improving utilization rates, and the return of diesel exports — which rebounded to around 900,000 barrels per day in December — brought Russian diesel back to the market, pressuring margins, before the EU sanctions that took effect on January 21 temporarily provided renewed support. The resurgence of Russian diesel flows has once again reshaped trade routes, triggering a sharp rebound in shipments to Brazil despite earlier declines. This highlights both Russia’s growing resilience to refinery attacks and the limits of sanctions pressure when discounted fuel meets sustained demand.

The widening in diesel crack spreads through most of 2025 was driven largely by a sharp contraction in Russian exports, which fell to a five-year low of 586,000 barrels per day in September. This tightening was the result of a sudden shock rather than a gradual decline. It began in January with a Ukrainian drone strike on the Ryazan refinery — with a capacity of 13.1 million tonnes per year, accounting for roughly 5% of national refining capacity — and continued throughout the year as repeated attacks disrupted refining operations. Pressure intensified in the autumn, peaking in November with a record 14 drone strikes in a single month, including an attack on the Afipsky refinery near Krasnodar, which has a capacity of 9.1 million tonnes per year. Media reports indicate that more than 20 refineries were damaged during 2025, with some estimates suggesting that around 20% of national refining capacity was offline at various points due to strikes or maintenance. Refinery utilization fell to about 5 million barrels per day in September, prompting Russia to impose partial restrictions on diesel shipments and introduce a temporary ban on diesel exports by non-producing companies in September 2025, later extended through March 2026.

This tightness began to ease in December. As a result, diesel crack spreads declined steadily, reaching $19.89 per barrel by mid-January, as Russian refinery utilization recovered faster than expected. Average Russian diesel production reached 1.8 million barrels per day in the first half of January 2026 — the highest level since January 2025 — with ultra-low sulfur diesel (ULSD) accounting for roughly 1.75 million barrels per day. Overall refinery throughput rose from around 5 million barrels per day in September to approximately 5.5 million barrels per day in December. This recovery came despite widespread expectations that repairs would take longer, particularly given restrictions on access to Western equipment and materials needed to fix damaged refining units. Russian operators, however, appear to have restored capacity more quickly than anticipated.

The recovery has been evident not only in output but also in export flows. In December, the Tuapse refinery — heavily export-oriented — suffered significant damage from a drone strike, yet ULSD loadings resumed by mid-January. Data from Kpler show two cargoes loaded on January 10 and January 14, bound for Turkey and Libya respectively. At the Primorsk oil terminal alone, January’s loading program is set to reach 2.2 million tonnes, a 27% month-on-month increase, with volumes rising from 440,000 barrels per day in December to 528,000 barrels per day in January. This marks the highest loading level ever recorded at Primorsk, underscoring its growing importance as exporters divert additional volumes away from the Black Sea, where Ukrainian attacks on Russian oil tankers have become more frequent. Overall, Russian diesel exports rose from about 590,000 barrels per day in September to roughly 900,000 barrels per day in December, representing a full year-on-year recovery.

Higher production has also translated into rising Russian diesel inventories, which reportedly reached a three-year high of 27.6 million barrels. Against this backdrop, Russian energy authorities are actively discussing lifting the export ban on diesel shipments by non-producing companies, arguing that domestic supply is now sufficient to meet internal demand even through the winter.

While the initial recovery pressured margins, diesel crack spreads later rebounded, reaching $25.43 per barrel by January 21, supported by colder weather and seasonal demand. This recovery is likely to encourage further Russian diesel exports, particularly to price-sensitive destinations where alternative supplies remain limited.

Brazil is a clear example. Chronic constraints in domestic refining capacity leave the country heavily dependent on diesel imports, making discounted Russian barrels economically attractive. However, Brazilian purchases fell sharply in the second half of 2025 as Russian supply tightened and political risks increased. Imports from Russia dropped from 247,000 barrels per day in March — when US President Donald Trump first signaled the possibility of new sanctions on Russian oil if peace talks with Ukraine failed — to just 49,000 barrels per day in November, when those sanctions took effect. US diesel emerged as a key substitute for lost Russian volumes during the autumn of 2025. Those constraints, however, proved temporary. In December, Brazilian imports of Russian diesel rebounded to 181,000 barrels per day, suggesting that domestic supply gaps, favorable pricing, and growing fatigue with ongoing US pressure ultimately outweighed concerns about tensions with Washington. Moreover, Indian diesel exports to Brazil since November 2025 have come almost exclusively from Nayara Energy’s Vadinar refinery — a sanctioned facility partially owned by Rosneft and fully dependent on Russian crude.

Three key conclusions stand out. First, Russia has demonstrated far greater resilience to drone attacks on its refining infrastructure, with operators increasingly able to repair damage quickly. As the pace of long-range Ukrainian strikes on refineries slows, refinery utilization is likely to remain stable, while weaker post-winter diesel demand combined with steady Russian supply points to narrower crack spreads in spring 2026. Second, as refining capacity continues to recover, Russia’s need to export crude is likely to diminish, increasing the probability of lower crude oil exports in the period ahead. Third, Western efforts to curb purchases of Russian petroleum products remain structurally weak. As long as Russian diesel is offered at discounted prices and demand remains strong, economic incentives will continue to outweigh political risks — a reality that has repeatedly reasserted itself across global fuel markets.

Copper prices fell during Tuesday’s trading, amid heavy profit-taking across most commodities and metals following recent strong gains led by silver and gold.

Deutsche Bank’s research unit expects the so-called incentive pricing regime for copper to persist, driven by constrained mine supply and rising demand linked to electrification and the transition to clean energy.

The report noted that copper prices are likely to reach a quarterly peak of $13,000 per tonne in the second quarter of the year, before easing gradually in the second half as production begins to recover at several major mines.

It added that the potential imposition of US tariffs on refined copper could contribute to heightened price volatility in the market.

Deutsche Bank said: “We believe the incentive pricing regime for copper will remain in place, supported by rigid mine supply, demand drivers linked to electrification, and higher capital spending on new projects.”

The bank added: “We expect prices to reach a quarterly peak of $13,000 per tonne in the second quarter, followed by some easing in the second half of the year as output at several major mines begins to recover.”

It also noted: “The threat of US tariffs on refined copper is likely to sustain metal flows into the United States during the first half of the year, although policy developments could lead to elevated volatility later in the year.”

Meanwhile, the dollar index fell by 0.7% to 96.3 points as of 15:49 GMT, after touching a high of 97.2 and a low of 96.2.

In trading, March copper futures dropped by 3.1% to $5.83 per pound at 15:42 GMT.

Bitcoin edged slightly higher on Tuesday, but remained stuck in a narrow range below the $90,000 level, trading near one-month lows, as investors stayed cautious ahead of the US Federal Reserve’s monetary policy meeting, with limited appetite for high-risk assets.

The world’s largest cryptocurrency was trading up 0.4% at $88,296.5 as of 01:33 a.m. US Eastern Time (06:33 GMT).

Bitcoin has struggled to regain momentum after suffering sharp losses last week, and is up only about 1% since the start of 2026, underperforming other assets despite the recent weakness in the US dollar.

Bitcoin struggles ahead of the Fed decision

Bitcoin has failed to benefit from macroeconomic conditions that have traditionally been supportive for digital assets.

This weak price performance comes as gold and silver continue to hit successive record highs, reflecting strong demand for safe-haven assets amid heightened geopolitical uncertainty and concerns over global economic growth.

Market focus has now shifted to the US Federal Reserve’s two-day policy meeting, which begins later on Tuesday. Policymakers are widely expected to leave interest rates unchanged when the meeting concludes on Wednesday.

While a pause is already fully priced in, traders are closely watching the Fed’s statement and Chair Jerome Powell’s press conference for signals on the timing of any potential rate cuts and the central bank’s outlook on inflation.

Any shift in Powell’s tone could influence overall risk appetite and liquidity conditions, both of which are key drivers for cryptocurrency markets.

Markets are also watching for potential announcements regarding US President Donald Trump’s nomination of a new Federal Reserve chair, a move that could shape future monetary policy direction and longer-term expectations.

Japan could see its first crypto ETFs by 2028

Japan’s Nikkei newspaper reported on Monday that the country’s first exchange-traded funds (ETFs) investing in cryptocurrencies could be listed as early as 2028, potentially making it easier for retail investors to gain exposure to Bitcoin and other digital assets.

According to the report, Japan’s Financial Services Agency plans to add cryptocurrencies to the list of assets eligible for ETF products, while strengthening investor protection measures.

It added that firms such as Nomura Holdings and SBI Holdings are among the candidates to launch such products, subject to approval by the Tokyo Stock Exchange.

Cryptocurrency prices today: altcoins post modest gains in range-bound trade

Most major altcoins also recorded modest gains, but continued to trade within tight ranges.

Ethereum, the world’s second-largest cryptocurrency, rose 1.5% to $2,935.92.

XRP, the third-largest cryptocurrency, climbed 1.1% to $1.90.

Oil prices were largely steady on Tuesday, as a major winter storm disrupted crude output and affected refineries along the US Gulf Coast, while the upward pressure from supply outages was offset by the resumption of flows from Kazakhstan.

Brent crude futures fell by 6 cents, or 0.1%, to $65.53 a barrel by 11:46 GMT. US West Texas Intermediate crude slipped by 1 cent, or nearly flat, to $60.62 a barrel.

The United States suffered production losses as a severe winter storm swept across large parts of the country, placing heavy strain on energy infrastructure and power grids.

Analysts and traders estimated that US oil producers lost up to 2 million barrels per day, roughly 15% of total national output, over the weekend.

At the same time, several refineries along the US Gulf Coast reported weather-related disruptions, which ANZ analyst Daniel Hynes said raised concerns about fuel supply interruptions.

Cold weather may drive inventory drawdowns

Tamas Varga, oil analyst at brokerage PVM, said: “Cold weather in the United States is likely to lead to significant declines in oil inventories over the coming weeks, especially if these conditions persist.” He added that this could support prices in the near term.

However, gains in oil prices were capped by developments in Kazakhstan, which is preparing to restart production at its largest oil fields, according to the country’s energy ministry. Industry sources said output levels remain subdued.

The Caspian Pipeline Consortium (CPC), which operates Kazakhstan’s main export route, also announced that it had restored full loading capacity at its terminal on Russia’s Black Sea coast, following the completion of maintenance work at one of its three mooring points.

Varga noted that some traders are also likely to take profits in the heating oil market, which has surged in recent days due to the cold weather in the United States.

Supply risks persist amid Middle East tensions

On the geopolitical front, two US officials told Reuters on Monday that a US aircraft carrier and accompanying warships have arrived in the Middle East, expanding President Donald Trump’s ability to defend US forces or carry out potential military action against Iran.

“Mideast supply risks have not disappeared,” ANZ’s Daniel Hynes said. “Tensions remain elevated after President Trump deployed naval assets to the region.”

On the supply side, the OPEC+ alliance is expected to maintain its pause on oil output increases for March at a meeting scheduled for February 1, according to three OPEC+ delegates cited by Reuters.