Outlook
Oil-linked currencies remain prone to volatility as geopolitical tensions around Iran and broader Middle East risk keep Brent near current highs. The U.S. move to Brent as the benchmark reinforces Brent’s global relevance, supporting the OIL currency in risk-prone environments. If tensions remain elevated, the OIL currency may stay bid versus USD and peers; if tensions ease, Brent could soften and the OIL currency could ease from current levels. Near term prices could stay within the current range unless a new shock emerges.
Key drivers
• Brent crude prices surged amid geopolitical tensions, with Brent closing around $70.69 in January 2026, reflecting rising risk premia from Iran and Venezuela.
• The U.S. consideration of a strike on Iran added to supply-side risk, lifting oil prices to their highest levels since the prior autumn.
• Brent surpassed $70 for the first time since September, underscoring ongoing geopolitical risk and its impact on energy markets.
• The U.S. Energy Information Administration shifted its benchmark to Brent, aligning forecasts with global oil pricing and reinforcing Brent as the global anchor.
Range
OIL to USD is at 7-day lows near 70.86, 9.4% above its 3-month average of 64.77, having traded in a very volatile 21.5% range from 59.04 to 71.76.
OIL to EUR is at 7-day lows near 60.04, 8.9% above its 3-month average of 55.11, having traded in a very volatile 21.2% range from 50.26 to 60.91.
OIL to GBP at 52.53 is 9.4% above its 3-month average of 48.02, having traded in a very volatile 21.1% range from 43.98 to 53.24.
OIL to JPY at 11050 is 9.4% above its 3-month average of 10102, having traded in a very volatile 21.7% range from 9139 to 11121.
What could change it
• De-escalation or escalation of Iran-related tensions would likely drive Brent and the OIL currency lower or higher, respectively.
• A shift in global oil demand, or unexpected supply announcements from OPEC+ or other producers, could push Brent and related currencies beyond current ranges.
• A stronger or weaker U.S. dollar would influence OIL pairs, particularly OIL to USD, and could shift cross-rate dynamics with EUR, GBP, and JPY.
