Outlook
Oil remains a key driver for the OIL currency complex, with Brent supported by geopolitical risk and supply constraints. Geopolitical tensions in Iran and Venezuela, plus chatter around potential U.S. action, have kept Brent bid, while U.S. sanctions on Russia and an OPEC+ pause on production increases reinforce a risk premium. Near-term oil markets stay volatile, and CAD, NOK and RUB often move in tandem with oil prices. A renewed escalation could lift oil further and reinforce gains in oil-linked currencies, while de-escalation or easing supply could weigh on the rally.
Key drivers
• Geopolitical tensions in Iran and Venezuela continue to markup Brent risk premium.
• Potential U.S. military action against Iran adds a further supply-side risk to oil markets.
• U.S. sanctions on Russia and related disruptions (e.g., force majeure at a field) support tighter supply dynamics.
• OPEC+ decision to pause further production increases in Q1 2026 aims to manage oversupply and demand moderating trends.
• Oil-linked currencies—CAD, NOK and RUB—remain sensitive to Brent moves due to their export profiles.
• Overall oil market volatility remains elevated amid supply concerns and demand narratives.
Range
Brent Crude OIL/USD: 7-day low near 67.60; range 59.04–70.26; 3-month average 63.77.
OIL/EUR: 7-day low near 56.96; range 50.26–59.20; 3-month average 54.43.
OIL/GBP: 7-day low near 49.64; range 43.98–51.59; 3-month average 47.48.
OIL/JPY: 7-day low near 10339; range 9139–10818; 3-month average 9956.
What could change it
• Escalation of tensions in Iran/Venezuela or a new US action could push Brent higher and lift oil-linked currencies.
• De-escalation or resolution of geopolitical risks could weigh on oil prices and soften the OIL currency complex.
• Unexpected changes in OPEC+/non-OPEC supply policy or new sanctions affecting major producers could shift the balance.
• A sustained improvement or deterioration in global demand (growth trajectory) would influence oil prices and related currencies.
• A stronger or weaker USD environment will interact with risk sentiment and affect oil-denominated currencies.
