Recent developments in the oil market are significantly impacting oil-linked currencies. Analysts have noted revisions in the Brent crude oil price forecasts for 2026. J.P. Morgan maintains a projection of $58 per barrel, while ABN AMRO expects prices to average $55 per barrel and drop to $50 by year-end. Goldman Sachs anticipates prices to decline to $56 per barrel.
OPEC+ has decided to implement a small increase in oil output for December and plans to pause further increases in the first quarter of 2026. This strategy aims to stabilize the market amidst fears of an oversupply. Additionally, new sanctions imposed by the U.S. and EU on Russian oil assets are likely to contribute to market volatility and affect global oil supply.
The Energy Information Administration (EIA) forecasts a rise in global oil inventories, which may further exert downward pressure on prices. These factors suggest a challenging environment for oil-exporting nations, leading to potential depreciation in currencies like the Canadian dollar (CAD), Brazilian real (BRL), Russian ruble (RUB), South Korean won (KRW), and Mexican peso (MXN).
Currently, the OIL to USD exchange rate is around 62.09, which is close to the 7-day highs but remains 1.1% below its 3-month average of 62.77. This currency pair has experienced a notable 12.0% volatility range over the past few months, trading between 59.04 and 66.12. The OIL to EUR rate is at 53.13, also hitting 14-day highs but standing 1.5% under its 3-month average of 53.93, having fluctuated within a 13.1% range from 50.26 to 56.85.
For those trading in GBP, the OIL to GBP rate is at 46.00, near recent highs but 2.5% below its three-month average of 47.18, with a volatility of 12.7% from a low of 43.98 to a high of 49.56. Lastly, the OIL to JPY exchange rate is trading at 9729, aligning with its 3-month average and experiencing a 10.5% volatility range between 9139 and 10096.
As oil prices continue to react to global supply dynamics and geopolitical developments, stakeholders in oil-export-dependent currencies should remain vigilant, as these factors could further influence transaction costs for businesses and expatriates involved in cross-border activities.
