Outlook
The oil-linked currencies face a cautiously constructive near-term environment as oil holds firm amid geopolitical risk and supply constraints. Brent crude rose earlier in 2026 on tensions in Iran and Venezuela, with a potential U.S. military action adding to risk premiums. OPEC+ also paused further production increases for the first quarter of 2026, aiming to curb oversupply while demand remains moderating. Against this backdrop, CAD and NOK may stay supported by higher oil prices, while RUB remains sensitive to sanctions and energy flows. Overall, oil dynamics and geopolitical risk continue to shape the outlook for oil-linked FX, though broad USD moves and risk sentiment can cap or amplify gains. Current price action shows oil trading well above multi-month averages, underscoring ongoing risk pricing in oil markets.
Key drivers
- Geopolitical tensions in Iran and Venezuela.
- Potential U.S. military action against Iran.
- U.S. sanctions on Russia impacting oil supply.
- OPEC+ production pause in Q1 2026.
- Oil-exporting currencies (CAD, NOK, RUB) remain highly sensitive to oil price shifts.
Range
OIL to USD at 68.32 is 7.5% above its 3-month average of 63.56, having traded in a very volatile 17.0% range from 59.04 to 69.09.
OIL to EUR at 57.39 is 5.7% above its 3-month average of 54.29, having traded in a very volatile 16.3% range from 50.26 to 58.45.
OIL to GBP at 49.93 is 5.4% above its 3-month average of 47.38, having traded in a very volatile 15.6% range from 43.98 to 50.86.
OIL to JPY at 10671 is 7.5% above its 3-month average of 9931, having traded in a very volatile 18.4% range from 9139 to 10818.
What could change it
- A de-escalation of Iran/Venezuela tensions or a smooth resolution of sanctions could ease oil risk premiums and soften oil-linked FX.
- A stronger U.S. dollar or risk-off environment could pressure commodity currencies even if oil stays elevated.
- A surprise OPEC+ move (larger cuts or increases) could push oil higher or lower, re-pricing oil-linked currencies.
- Shifts in energy flows from Russia or Iran or unexpected geopolitical developments could reprice risk and volatility.
