Page 26 - Policy Economic Report - Feb 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Oil Market

Crude oil price – Monthly Review

Benchmark crude oil prices surged in January as a number of supply outages tightened physical crude
markets and geopolitical tensions rose between Iran and the United States. While prices gave back a few
dollars at the start of February on reports of progress in ongoing negotiations to de-escalate the tensions,
they quickly reversed course after the United States advised ships to steer clear of Iranian waters when
navigating the Strait of Hormuz.

Hedge funds and other money managers turned bullish in January, raising their net long positions sharply,
particularly in ICE Brent, where positions reached a four-month high. The increase in net long across ICE
Brent, NYMEX WTI, and ICE WTI reflects a rapid shift in risk appetite by speculators, underpinned by
sizeable financial inflows over the month. This repositioning was driven by a combination of market-
driving factors. Supply disruptions and heightened geopolitical risks boosted price expectations, while
stronger physical market signals reinforced confidence in underlying fundamentals. The rally in net long
positions was amplified by accelerated short covering in both ICE Brent and NYMEX WTI, as speculators
rushed to close previously accumulated bearish positions.

Crude spot markets rebounded firmly in January, as prices recovered following several consecutive
months of declines. The rebound was primarily driven by easing selling pressure in futures markets. In
addition, heightened geopolitical developments in several key producing regions added a risk premium to
the market. Supply disruptions in some regions further tightened spot market conditions, particularly in
the Atlantic Basin. Unplanned oil supply outages in the Caspian region, together with adverse weather
conditions in the US, raised concerns over near-term oil supply availability. Strong crude demand for
February-loading programmes, including from European buyers, supported spot prices in the Atlantic
Basin. Global refinery throughput remained relatively strong in January at around 83.4 mb/d, although it
edged slightly lower, m-o-m, which nonetheless helped sustain buying interest in the spot market. Price
gains were partially capped by weaker refining margins across major refining hubs, particularly in Europe,
as well as large builds in US petroleum product stocks. Spot crude prices strengthened relative to futures,
widening their premium as the market priced in potential supply disruptions. North Sea Dated remained
at a premium to ICE Brent’s front-month contract monthly in January, with the spread widening by
$0.95/b, m-o-m, to a premium of $2.00/b.

The premiums of light sweet crude over medium sour crude widened further in Asia and Europe, where
light sweet crudes continued to outperform medium and heavy sour grades for a second consecutive
month, although the spread remained little changed in the USGC. Strong demand for light sweet crude,
particularly in the Atlantic Basin – following supply outages in the Caspian region – boosted the value of
sweet grades. In addition, the stronger performance of light distillate margins, especially naphtha, relative
to heavier products contributed to the widening spread between sweet and sour crude. Meanwhile,
buying interest from some Asian refiners for medium- and heavy-sour grades softened amid ample supply
and a weak fuel oil market, thereby adding downward pressure on sour crude values.

In January, the OPEC Reference Basket (ORB) value rose by $0.61/b, month-on-month (m-o-m), to average
$62.31/b. The ICE Brent front-month contract rose by $3.10/b, m-o-m, to average $64.73/b, and the
NYMEX WTI front-month contract increased by $2.39/b, m-o-m, to average $60.26/b. The GME Oman
front-month contract rose by $0.83/b, m-o-m, to average $62.79/b. The forward curves of oil futures
prices strengthened, with the front end of the curves for both ICE Brent and NYMEX WTI moving into

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