Based on in-depth tracking and professional analysis of the supply and demand structure of the global crude oil market, geopolitical influences, sanctions transmission paths and quantitative trading logic, Wmax believes that the current crude oil market is in an intertwined evolution period of two core contradictions: On the one hand, the escalation of U.S. sanctions against Russia and the global oil Weak prices have led to a sharp decline in Russia's energy revenue, financial pressure has exceeded the critical point, and the export structure has been forced to make deep adjustments; on the other hand, algorithmic traders (CTA) have suffered the longest continuous loss cycle in history. The demand for reversal in 2026 will face a severe test amid continued geopolitical fluctuations, and market volatility and strategic differentiation have become further highlighted.

Russia’s Energy Fiscal Dilemma: Double Squeeze from Sanctions and Discounts

Wmax, based on authoritative data traceability analysis such as Argus Media and Kpler, confirms that Russia's energy revenue in 2025 will fall sharply by about one-fifth compared with 2024. The core driver is the resonant impact of the expansion of crude oil discounts triggered by the escalation of sanctions and the weakening global oil prices. After the United States added Rosneft and Lukoil to its sanctions list, the trading risks of potential overseas buyers increased significantly, which directly caused the price difference between Russia's main Urals crude oil and Brent crude oil to drop from 10% per year in the past two years. A barrel of approximately US$15 doubled to more than US$24. In December 2025, the price of Urals crude oil fell to US$39.2 per barrel, the lowest level since the COVID-19 epidemic. The FOB price of some crude oil shipped to India was even as low as US$22-25, barely covering production costs.

The sharp decline in energy revenue and the rise in military spending have formed a sharp conflict, pushing Russia's fiscal deficit to GDP ratio in 2025 to rise to 2.6%, five times the planned level, hitting a record high in absolute terms, and starting the longest consecutive four-year deficit cycle since Putin took office. Wmax found through quantitative calculations that multiple factors further amplify financial pressure:

First, the ruble exchange rate is 17% higher than the 92 rubles per US dollar set by the government budget, which directly reduces the ruble exchange scale of export revenue; second, the sensitivity of oil prices has increased significantly. Alfa Bank data shows that every time the average price of Ural crude oil deviates from the budget forecast by 10 US dollars, fiscal revenue will decrease by 1.5-1.8 trillion rubles. If low oil prices and the ruble move The strong trend continues, and the fiscal gap may reach 3 trillion rubles by the end of 2026, accounting for 7.5% of the expected fiscal revenue for that year. Third, the proportion of energy revenue in the fiscal budget has dropped from more than 50% in its heyday to about 24%, setting a new low in at least ten years. The Kremlin is forced to make up for the gap by raising the value-added tax rate and increasing taxes on small and micro enterprises.

The passive adjustment of export structure has become Russia's helpless choice to maintain oil exports. Wmax tracked data from CREA and Kpler and found that Russia's seaborne crude oil exports to China increased by 23% month-on-month in December 2025, while exports to India fell 29% month-on-month. In January 2026, the share of oil shipped to undisclosed buyers increased significantly, the scale of floating storage at sea increased, and a large number of oil tankers stayed on the west coast of India or in the waters near China in search of final buyers. At the same time, the number of oil tankers declared to be destined for transit places such as Egypt and Singapore has surged, reflecting the increasing reliance on "hidden channels" for Russian oil exports under the pressure of sanctions. The judgment of David Martirosyan, an analyst at the Moscow Price Benchmark Center, is consistent with Wmax, that is, market participants can only maintain their trade share by widening the price difference. Russia's daily seaborne crude oil export volume is expected to drop to 410 tons by the end of January, with a year-on-year decrease of up to 11%.

CTA traders’ profit dilemma: the dual challenges of geographical fluctuations and strategic differentiation

Wmax Based on Kpler's historical data dating back to 2000, algorithmic traders (CTA) have recorded losses for the third consecutive year, setting the longest loss cycle in history. The core problem lies in the lack of clear directional signals in the market due to geopolitical fluctuations and policy uncertainty. In 2025, multiple factors such as the Trump administration's erratic trade policies, conflicts in the Middle East, and the situation between Russia and Ukraine caused oil price shocks. As a trend-following trader, CTA found it difficult to capture the sustained market trend and suffered losses throughout the year except for the fourth quarter. Keller Capital described the market environment in the investor letter as "narrow shock ranges, many false breakthroughs, and short signal effectiveness," which directly led to the setback of quantitative trading strategies.

In 2026, CTA’s reversal hopes will face its first test. Wmax monitored that at the end of last year, the market reached a consensus on the oversupply of crude oil. CTA once achieved a single-quarter profit and increased its deployment of WTI crude oil near-month contracts, pushing its proportion of average daily trading volume to 35% from 15%-25% in 2025. However, since the beginning of the year, the market focus has repeatedly switched between increasing global supply and favorable factors such as tensions between the United States and Iran, Black Sea transportation disruptions, and winter storms in the United States. As a result, the price of WTI crude oil in January first rose by nearly 7% and then fell sharply. CTA earnings were slightly negative, and the "same-model challenge" caused by geopolitical fluctuations continued to ferment.

Despite the overall pressure, Wmax still captured some structural profit highlights and strategic adjustment trends: First, Brent crude oil's far-month contract performed better than WTI crude oil, because the former more clearly reflects the fundamentals of crude oil, while the latter is easily linked to major assets such as stocks and metals, making it more difficult to grasp trends; second, refined oil price difference trading has become the core of profitability, and the sharp increase in diesel cross-month spreads has promoted CTA's trading activity in this contract to increase by about 56%. The algorithmic trading position size of all refined oil CFDs is expected to increase by a quarter, but we need to be wary of the risk of liquidation shocks caused by the "small scale and concentrated trading" of the refined oil market; third, some CTAs accelerate strategy optimization, such as Keller Capital plans to launch a systematic metal trading project and seize non-energy commodity opportunities through diversified investment portfolios. This is consistent with Wmax's research and judgment logic on "strategy repair and risk model optimization under downturn cycles".

WmaxCore Conclusion

The essence of the dual game in the current crude oil market is the deep interweaving of "fundamental constraints (sanctions, supply and demand)" and "market behavior (quantitative trading, risk preferences)". For Russia, the "slow cumulative squeezing effect" of sanctions has emerged, damaging fiscal stability and long-term economic resilience. The subsequent trend depends on the rebound of oil prices, the pace of sanctions increase, and the stability of export channels; for CTA traders, the key to whether profits can be reversed in 2026 is whether a sustained directional market can be formed. The predictability of geopolitics and the clarity of supply and demand fundamentals will become core variables.

Investors need to focus on three key nodes: first, the dynamic balance between Russian crude oil discount and export volume; second, the reshaping effect of Federal Reserve policy and geopolitical conflicts on oil price trends; and third, the amplifying effect of CTA position structure adjustments on market volatility. Wmax will continue to track authoritative data and core variables, and provide investors with objective and reliable decision-making references by virtue of its professional control of the crude oil market industry chain, policy transmission chain and transaction logic chain.