Page 30 - Policy Economic Report - Jan 2026

POLICY AND ECONOMIC REPORT
OIL & GAS MARKET

Oil Market

Crude oil price – Monthly Review

The new year got off to a turbulent start as geopolitical tensions rose around Iran and Venezuela, bringing
new uncertainties regarding their future oil exports. Brent crude oil prices jumped by $6/bbl to around
$66/bbl in the early weeks of January before easing to $64/bbl. Oil exports from both Iran and Venezuela
were already under pressure. Iranian loadings dropped by 350 kb/d from October’s recent high to 1.6
mb/d over November and December, with volumes piling up at sea. Venezuelan crude exports slumped
from 880 kb/d in December to around 300 kb/d in early January, impacted by the US blockade of
sanctioned oil tankers travelling to and from the country.

Positioning from hedge funds and other money managers was volatile over December. The decline in net
long positions was more pronounced in the first half of December, as speculators sold the equivalent of
138 mb across the Brent and WTI contracts. However, in the second half of the month, speculators raised
their net long positions slightly.

Crude spot prices averaged lower in December, as selling activity in oil futures markets weighed on market
sentiment. However, these declines were limited as physical market fundamentals remained firm,
particularly in the Atlantic Basin, supported by renewed demand from European and US refiners. An uptick
in buying interest from Asian refiners further supported prices. Global refinery intakes rose further in
December to around 83.8 mb/d, indicating robust demand. Stock data were also supportive, as data from
the US Energy Information Administration (EIA) showed a draw of 4.6 mb in US crude oil stocks between
the weeks of 28 November and 26 December. In addition, supply outages in the Caspian Sea region
provided further support to spot crude markets.

The premium of light sweet crude over medium sour crudes widened across all major trading hubs. This
increase was driven by the weaker performance of heavy/medium sour crudes compared to light sweet
crudes. The value of light sweet crude was bolstered by supportive supply/demand fundamentals, while
sour grades came under pressure as supply risk premiums receded and demand for prompt-loading
cargoes in Eastern Europe, as seen last month, softened. Weaker fuel oil margins also weighed on the sour
crude market.

In December, the OPEC Reference Basket (ORB) value dropped by $2.72/b, month-on-month (m-o-m), to
average $61.74/b. The ICE Brent front-month contract dropped by $2.03/b, m-o-m, to average $61.63/b
in December, and the NYMEX WTI front-month contract dropped by $1.61/b, m-o-m, to average $57.87/b.
The GME Oman front-month contract dropped by $2.57/b, m-o-m, to average $61.96/b. The Brent–WTI
front-month spread dropped by $0.42/b, m-o-m, to average $3.76/b in December. The forward curves of
all major crude benchmarks remained in backwardation in December, signalling supportive physical crude
market fundamentals and a positive short-term global supply–demand outlook.

Brent crude ranged an average to $64.01 a barrel and WTI ranged to $59.78 per barrel in the month of
January 2026.

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