Outlook
Brent prices face ongoing sensitivity to OPEC+ policy and Middle East risk, keeping OIL around the mid-60s with upside potential if supply tightens or sanctions tighten markets. If demand proves more resilient or supply steadies, oil could ease toward the lower 60s. Oil-linked currencies should track oil moves, with CAD and NOK typically the most responsive on upticks, while RUB and BRL respond more gradually.
Key drivers
- OPEC+ decision on January 4, 2026 to pause further production increases for Q1.
- Geopolitical tensions: past Israeli airstrikes on Iran highlighted how Middle East risk can lift oil prices.
- Sanctions on Russian oil exports in November 2025 disrupted supply and supported prices temporarily.
- Shifts in Indian refining strategies: December 2025 imports from Saudi Arabia and Iraq rose by about 600,000 barrels per day, affecting global demand dynamics.
Range
OIL to USD at 65.20 is 3.5% above its 3-month average of 62.98, having traded in a rather volatile 12.1% range from 59.04 to 66.18
OIL to EUR at 54.89 is 1.6% above its 3-month average of 54.03, having traded in a rather volatile 13.5% range from 50.26 to 57.03
OIL to GBP at 47.67 is just 0.9% above its 3-month average of 47.25, having traded in a rather volatile 12.6% range from 43.98 to 49.54
OIL to JPY at 10057 is 2.4% above its 3-month average of 9821, having traded in a rather volatile 14.9% range from 9139 to 10499
What could change it
- New OPEC+ policy moves, including unexpected changes to production cuts or output targets.
- Escalation or de-escalation of Middle East tensions that affect risk premiums and supply expectations.
- Additional sanctions or eased restrictions on major oil exporters (notably Russia) altering supply dynamics.
- Shifts in major importers’ demand or refining strategies (e.g., changes in Indian or Chinese intake) influencing global demand.
- Broad changes in macro factors: USD strength, global growth data, and crude inventories that alter risk sentiment and price direction.
