Outlook
Oil markets remain sensitive to geopolitical risk, with Brent hovering around the $70s and the potential for further moves tied to geopolitical developments. The OIL currency pairs (OIL/USD, OIL/EUR, OIL/GBP, OIL/JPY) look set to stay bid as long as Brent holds this level or higher, though a shift in risk sentiment or a de-escalation in tensions could pull prices back.
Key drivers
- Brent crude prices surged on geopolitical tensions, with January 2026 reporting a 16.2% rise to $70.69 per barrel as Iran and Venezuela tensions persisted.
- U.S. consideration of a potential strike on Iran lifted the market, pushing prices to their highest levels since the prior autumn.
- Brent crude traded above $70 for the first time since September, reinforcing the perception of elevated risk premia in oil.
- The U.S. Energy Information Administration moved its benchmark to Brent, aligning forecast pricing with global Brent movements rather than WTI, which had diverged from global price action.
Range
OIL to USD: 70.92, 9.6% above its 3-month average of 64.69, range 59.04 to 71.76
OIL to EUR: 60.03, 9.0% above its 3-month average of 55.05, range 50.26 to 60.91
OIL to GBP: 52.31, 9.0% above its 3-month average of 47.97, range 43.98 to 53.24
OIL to JPY: 11077, 9.8% above its 3-month average of 10090, range 9139 to 11121
What could change it
- Sustained Brent above current levels with ongoing geopolitical risk could push the OIL currency higher or keep it supported.
- A de-escalation in tensions, easing sanctions, or a calm around Iran could weigh on oil prices and pull the OIL currency lower.
- A stronger USD driven by US rate expectations or safe-haven demand could pressure OIL pairs even if oil stays firm.
- Shifts in global demand outlook or supply dynamics (e.g., OPEC+ policy changes) could alter the forecast path for the OIL currency.
