The dispute between Kiev and Moscow arose over the price of Russian gas delivered to Ukraine through a pipeline which then runs on to customers further West. Russia cut supplies to its neighbour after Kiev objected to a fourfold price increase. A deal was reached on 4 January, calming the market.

The other main political jitter helping push up prices in early January was the statement by Iranian President Ahmadinejad that Tehran intended to resume nuclear research, prompting fears of renewed tension with the international community. Kazem Vaziri-Hamaneh, the new oil minister finally confirmed in early December by the Majlis (parliament), also raised traders' fears by calling for a 1 million-barrel-a-day (b/d) cut in the OPEC quota when the group meets in late January.

News from Iraq was also poor, with exports from the Basra terminal having to be shut off for a week due to bad weather and an explosion cutting exports through the northern Ceyhan-Kirkuk pipeline, which was only recently reopened.

Weekly US stock data was not published on 4 January due to the New Year holiday. However, the latest set of data released in late December showed crude stocks at 322.6 million barrels, 12.6 per cent higher than a year earlier. Distillate stocks were marginally higher at 126.8 million barrels, but gasoline supplies have dropped by 6 per cent to 202.9 million barrels. Immediate concerns about stocks have been eased by mild weather in the US.