Outlook
Outlook Markets expect oil to stay supported near current highs as geopolitical risk remains elevated. Brent crude rose sharply in January, with price momentum supported by tensions around Iran and Venezuela, in tandem with a decision by OPEC+ to hold output steady. The easing of U.S. sanctions on Venezuela may increase supply, potentially tempering upside if supply stress eases. Oil-linked currencies such as CAD, NOK, and RUB could stay bid while oil remains firm, as OIL/USD lingers above its 3-month average.
Key drivers
- Surge in Brent crude prices amid geopolitical tensions (Iran and Venezuela) in January 2026.
- Potential U.S. military action in Iran weighing on prices, contributing to volatility.
- OPEC+ maintains its pause on output hikes to stabilize the market amid uncertainty.
- U.S. eases sanctions on Venezuela, potentially boosting global oil supply.
- Current OIL pairs trading well above their 3-month averages, with notable range conditions indicating elevated volatility.
Range
OIL to USD 70.88, 10.0% above its 3-month average of 64.43, with a very volatile 3-month range from 59.04 to 71.76.
OIL to EUR 59.93, 9.2% above its 3-month average of 54.87, with a 3-month range from 50.26 to 60.91.
OIL to GBP 52.40, 9.6% above its 3-month average of 47.82, with a 3-month range from 43.98 to 53.24.
OIL to JPY 10935, 8.8% above its 3-month average of 10049, with a 3-month range from 9139 to 11121.
What could change it
- Escalation or de-escalation of Iran-related risk driving further oil price moves.
- Changes in Venezuela sanctions or production affecting global supply.
- OPEC+ policy shifts beyond the current pause, altering supply expectations.
- Shifts in global demand dynamics or USD strength impacting oil-denominated pricing.
