Outlook
Oil-linked currencies are likely to stay sensitive to oil prices and geopolitical risks. Brent sits around the mid-to-high $60s, with 7-day lows near 67.17 and a 5.3% premium to the 3-month average (63.76), trading in a wide 19.0% range from 59.04 to 70.26. OPEC+ paused further production increases for Q1 2026 to manage supply amid moderating demand, while sanctions on Russia and the prospect of U.S. action against Iran add supply risk. CAD and NOK tend to strengthen when oil prices rise, while RUB remains exposed to energy revenue flows and sanctions. JPY may move with broader risk sentiment, with oil-driven risk appetite supporting commodity-linked currencies when risk appetite improves.
Key drivers
- Geopolitical tensions in Iran and Venezuela: In January 2026, Brent crude prices surged about 16.2%, closing at $70.69 per barrel, driven by escalating geopolitical risks in Iran and Venezuela.
- Potential U.S. military action against Iran: On January 29, 2026, Brent futures climbed to a four-month high amid concerns over a possible U.S. strike on Iran.
- U.S. sanctions on Russia impacting supply: In November 2025, U.S. sanctions disrupted oil shipments, with Lukoil declaring force majeure at an Iraqi field, adding to price pressures.
- OPEC+ production decisions amid oversupply concerns: December 2025 saw OPEC+ pause further production increases for Q1 2026 to manage supply amid moderating demand.
- Oil-linked currencies sensitivity: CAD and NOK typically rise with higher oil prices, while RUB remains highly exposed to sanctions and energy revenue flows.
Range
OIL to USD: 7-day lows near 67.17, 5.3% above its 3-month average of 63.76, having traded in a 19.0% range from 59.04 to 70.26. OIL to EUR: 7-day lows near 56.57, 4.0% above its 3-month average of 54.41, trading in a 17.8% range from 50.26 to 59.19. OIL to GBP: 7-day lows near 49.19, 3.7% above its 3-month average of 47.46, with a 17.3% range from 43.98 to 51.58. OIL to JPY: 14-day lows near 10256, 3.0% above its 3-month average of 9954, trading in an 18.4% range from 9139 to 10818.
What could change it
- A sharp move in oil prices driven by new sanctions, sanctions relief, or a fresh geopolitical shock.
- Changes in OPEC+ policy, including unexpected production hikes or cuts.
- Shifts in global demand due to economic data or policy changes in major economies.
- A stronger or weaker U.S. dollar driven by monetary policy and risk sentiment, which would affect all oil-linked currencies.
