Bias: Mildly bullish for OIL and oil-linked currencies near term, supported by supply discipline from OPEC+ and sanctions on Russian exports, plus stronger Indian demand; downside risk if global growth slows or geopolitical risk eases.
Key drivers:
- OPEC+ paused further production increases for Q1 2026, aiming to stabilize a potential supply surplus.
- Sanctions on Russian oil exports in late 2025 disrupted supply chains, providing price support.
- Indian refining/import strategy shifted with 600,000 bpd more imports from Saudi Arabia and Iraq in December 2025, boosting oil demand.
- Geopolitical tensions in the Middle East, notably past Israeli airstrikes on Iran, underscored supply risk and price spikes.
- Recent price action highlights: Brent Crude OIL/USD 63.77 (1.3% above its 3-month average of 62.93) within a 12.1% volatility range of 59.04–66.18; OIL/EUR 54.90 (1.5% above 3-month average 54.07) within 13.5% range of 50.26–57.03; OIL/GBP 47.62 (0.7% above 3-month average 47.29) within 12.7% range of 43.98–49.56; OIL/JPY 10055 (2.7% above 3-month average 9794) within 14.9% range of 9139–10499.
Range: Brent Crude OIL/USD 59.04–66.18; OIL/EUR 50.26–57.03; OIL/GBP 43.98–49.56; OIL/JPY 9,139–10,499.
What could change it:
- A shift in OPEC+ policy (return to production increases or deeper cuts).
- Reversal or tightening of sanctions on Russian oil, or new export controls.
- Changes in Indian refinery demand or global demand trajectories (faster/slower growth).
- Escalation or de-escalation of Middle East tensions affecting supply risk.
- Unexpected shifts in USD strength or global macro data altering oil demand expectations.
