Outlook
Oil remains bid around the mid-60s as OPEC+ keeps production in check, supporting Brent and oil-related currencies. Sanctions on Russian oil and firmer demand from India add to the upside risk, while supply discipline could keep Brent anchored unless geopolitics or demand shifts tilt the balance. Current OIL quotes sit above their 3-month averages across major pairs, which tends to underpin modest strength in oil-importing currencies in the near term. If OPEC+ maintains the pause and geopolitical risk stays elevated, Brent could test the upper end of recent ranges; softer demand or easing tensions could pull prices toward the lower end.
Key drivers
- OPEC+ decision in early January to pause further production increases for Q1, aiming to stabilise the market.
- Geopolitical tensions in the Middle East, including prior Israeli-Iranian actions, creating upside price risk.
- Sanctions on Russian oil exports disrupting supply chains and providing price support.
- Shifts in Indian refining strategies, with December 2025 imports from Saudi Arabia and Iraq rising by about 600,000 barrels per day, affecting global demand dynamics.
- Recent price action confirming oil trading above key three-month averages: OIL to USD 65.04 (3.2% above the 3-month average of 63; range 59.04 to 66.18), OIL to EUR 54.87 (1.5% above the 3-month average of 54.05; range 50.26 to 57.03), OIL to GBP 47.64 (0.8% above the 3-month average of 47.27; range 43.98 to 49.54), OIL to JPY 10087 (2.7% above the 3-month average of 9824; range 9139 to 10499).
Range
OIL to USD: 65.04 current; 3-month average 63.00; range 59.04 to 66.18.
OIL to EUR: 54.87 current; 3-month average 54.05; range 50.26 to 57.03.
OIL to GBP: 47.64 current; 3-month average 47.27; range 43.98 to 49.54.
OIL to JPY: 10087 current; 3-month average 9824; range 9139 to 10499.
What could change it
- OPEC+ policy surprises: unexpected production increases or deeper cuts.
- Escalation or de-escalation of Middle East geopolitical tensions affecting supply risk.
- New sanctions on Russia or a rollback of existing sanctions impacting oil flows.
- Sudden shifts in global oil demand (notably China/US data) or changes in non-OPEC supply.
- Significant USD moves that alter USD-priced oil dynamics.
