Crude Oil Radar

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 decreased by $2.03/b, m-o-m, averaging $61.63/b, while the NYMEX WTI front-month contract fell by $1.61/b, m-o-m, to average $57.87/b. The GME Oman front-month contract also saw a decline of $2.57/b, m-o-m, averaging $61.96/b.

The Brent–WTI front-month spread narrowed 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, indicating supportive physical market fundamentals and a positive short-term global supply–demand outlook, despite persistent selling pressure in futures markets. Notably, the forward curves for ICE Brent and GME Oman flattened further, while the backwardation in NYMEX WTI strengthened slightly.

Global economic growth is forecast at 3.1% in 2026, unchanged from last month’s assessment, with an expected acceleration to 3.2% in 2027. Key economic forecasts include:

• US: 2.1% growth in 2026, 2.0% in 2027
• Eurozone: 1.2% growth for both 2026 and 2027
• Japan: 0.9% growth for both years
• China: 4.5% growth for both years
• India: 6.6% in 2026, 6.5% in 2027
• Brazil: 2.0% in 2026, rising to 2.2% in 2027
• Russia: 1.3% in 2026, improving to 1.5% in 2027

This positive outlook is supported by normalization in global trade, fiscal support measures, and adjustments to monetary policies in major economies.

The global oil demand growth forecast for 2026 remains at 1.4 mb/d, y-o-y, with the OECD expected to grow by 0.15 mb/d and non-OECD by around 1.2 mb/d. In 2027, global oil demand is projected to grow by about 1.3 mb/d, y-o-y. The breakdown is as follows:

• OECD: 0.1 mb/d growth in 2027
• Non-OECD: 1.2 mb/d growth in 2027

Key demand drivers include economic recovery and increased consumption in emerging markets, while constraints may arise from geopolitical tensions and supply chain disruptions.

Non-DoC liquids production is forecast to grow by about 0.6 mb/d, y-o-y, in both 2026 and 2027, driven primarily by:

• Brazil
• Canada
• US
• Argentina

Natural gas liquids (NGLs) and non-conventional liquids from DoC countries are projected to increase by 0.1 mb/d in both years. However, crude oil production by DoC countries decreased by 238 tb/d in December, averaging about 42.83 mb/d.

Refining margins experienced a decline across all regions in December, following a sharp upward trend in previous months. Contributing factors include:

• Product inventory builds, particularly for transport fuels
• Seasonal demand-side pressures
• Decline in European product flows to West Africa
• Increased domestic product supplies in Southeast Asia

This decline in margins indicates a challenging environment for refiners amidst fluctuating demand and supply dynamics.

Dirty tanker spot freight rates declined in December after strong gains earlier in the year. Key movements included:

• VLCC spot freight rates dropped but remained strong due to long-haul demand
• Middle East-to-East route rates decreased by 12%, m-o-m
• Suezmax rates fell by 12%, m-o-m, due to reduced tightness in the VLCC market
• Aframax rates saw a moderate decline of 4%, m-o-m

In contrast, the clean tanker market saw upward momentum, with rates on the Middle East-to-East route rising by 14%, m-o-m, reflecting increased refinery activity.

In December, US crude imports remained stable at just under 6 mb/d, while exports increased by almost 10%, m-o-m. Key trade patterns included:

• OECD Europe: Crude imports increased, while product imports declined
• Japan: Crude imports averaged 2.4 mb/d, supported by regional demand
• China: Crude imports rose to 12.4 mb/d, a 9% increase, following quota releases
• India: Crude imports remained above the five-year range at 5.1 mb/d

These trends indicate a dynamic trading environment influenced by regional demands and supply adjustments.

Preliminary data for November 2025 indicated that OECD commercial inventories rose by 4.0 mb, m-o-m, totaling 2,840 mb. Key highlights include:

• Crude stocks increased by 8.1 mb, while product stocks fell by 4.1 mb
• OECD crude oil commercial stocks stood at 1,346 mb, 39.1 mb higher than a year ago
• Days of forward cover rose by 0.2 days, m-o-m, to 62.2 days

While stocks are above the five-year average, they remain below the 2015–2019 average, indicating a tightening market.

Demand for DoC crude in 2026 is forecast at 43.0 mb/d, increasing to 43.6 mb/d in 2027. The supply-demand balance analysis reveals:

The analysis indicates a significant supply-demand gap, necessitating a strategic outlook for production decisions. The DoC requirement for 2026 is 43.0 mb/d, which is 0.6 mb/d higher than the previous year, highlighting the need for careful management of production levels to maintain market stability.