Crude Oil Radar

OPEC Market Analysis

Crude Oil Price Movements

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 increased by $3.10/b, m-o-m, to average $64.73/b, while the NYMEX WTI front-month contract rose by $2.39/b, m-o-m, averaging $60.26/b. The GME Oman front-month contract also saw an increase of $0.83/b, m-o-m, averaging $62.79/b. The Brent–WTI front-month spread rose by $0.71/b, m-o-m, to average $4.47/b.

The forward curves of all major crude benchmarks strengthened, with the front end of the curves for both ICE Brent and NYMEX WTI moving into stronger backwardation. This shift indicates a tightening physical market, supported by oil supply outages, easing selling pressure from speculators, and robust physical market fundamentals. The forward curve for GME Oman remained relatively unchanged, m-o-m. Speculative sentiment turned bullish, with hedge funds and other money managers sharply increasing their net long positions.

World Economy & Macroeconomic Backdrop

The global economic growth forecasts remain stable, projected at 3.1% for 2026 and 3.2% for 2027. The US economic growth forecast has been slightly revised up to 2.2% for 2026, while it remains at 2% for 2027. The Eurozone's growth forecasts are steady at 1.2% for both years. Japan's economy is expected to grow by 0.9% in both 2026 and 2027. China's growth forecast remains at 4.5%, while India's is projected at 6.6% for 2026 and 6.5% for 2027. Brazil's growth remains at 2.0% for 2026 and 2.2% for 2027, while Russia's forecasts are at 1.3% for 2026 and 1.5% for 2027.

Trade normalization and monetary policy impacts are expected to influence these growth rates, with potential implications for oil demand.

World Oil Demand Trends

The global oil demand growth forecast for 2026 remains at 1.4 mb/d, y-o-y, unchanged from last month’s assessment. The OECD is projected to increase by 0.15 mb/d, while the non-OECD is expected to grow by approximately 1.2 mb/d. In 2027, global oil demand is forecast to grow by about 1.3 mb/d, y-o-y, with the OECD growing by 0.1 mb/d and the non-OECD maintaining its growth trajectory of about 1.2 mb/d.

Regional demand distribution patterns indicate that non-OECD countries will continue to be the primary drivers of demand growth, influenced by economic expansion and increased energy needs.

World Oil Supply Analysis

Non-DoC liquids production is forecast to grow by about 0.6 mb/d, y-o-y, in 2026, with similar growth expected in 2027. This growth is primarily driven by Brazil, Canada, the US, and Argentina. Natural gas liquids (NGLs) and non-conventional liquids from DoC countries are expected to grow by 0.1 mb/d, y-o-y, in both 2026 and 2027.

In January, crude oil production by countries participating in the DoC decreased by 439 tb/d, m-o-m, averaging about 42.45 mb/d, indicating the need for careful monitoring of production levels to balance supply and demand.

Product Markets & Refining Operations

In January, refining margins declined across all reported trading hubs due to stronger feedstock prices and seasonal demand-side pressures. The US Gulf Coast experienced losses primarily from the bottom section of the barrel, while in Rotterdam, all key product margins fell, with gasoline leading the decline. In Singapore, elevated gasoline and jet/kerosene supplies contributed to the margin downturn.

Seasonal demand pressures are expected to continue influencing refining operations, with regional product flow dynamics adapting to changing market conditions.

Tanker Market & Freight Dynamics

Dirty tanker spot freight rates started the year strongly, supported by weather disruptions and geopolitical uncertainties. VLCC spot freight rates experienced a remarkable increase, with rates on the Middle East-to-East route reaching a decade-high, up by 64%, y-o-y. Suezmax rates also rose due to weather disruptions, while Aframax rates saw a strong performance, with cross-Med Aframax rates rising by 10%, m-o-m.

In the clean tanker market, spot freight rates were robust, particularly in the East of Suez, with rates on the Middle East-to-East route up by 17%, m-o-m.

Crude & Refined Products Trade Flows

In January, US crude imports averaged 6.3 mb/d, aligning with the five-year average. US crude exports rose by almost 0.2 mb/d, m-o-m, to average 4.2 mb/d, with higher flows to Europe and Africa. Product exports from the US averaged 7.0 mb/d, down from elevated levels in previous months.

In Japan, crude imports surged to just under 3 mb/d, while China's crude imports reached a record high of 13.2 mb/d in December. India's crude imports remained elevated at 5.1 mb/d, despite a slight decline, m-o-m. These trends indicate shifting trade patterns and regional dynamics in crude and product flows.

Commercial Stock Movements

Preliminary December 2025 data show that OECD commercial oil inventories rose by 6.5 mb, m-o-m, to stand at 2,845 mb. This level is 89.9 mb higher, y-o-y, and 44.1 mb above the latest five-year average. Crude stocks fell by 2.1 mb, while product stocks increased by 8.6 mb, m-o-m. OECD crude oil commercial stocks stood at 1,363 mb, which is 75.5 mb higher, y-o-y.

In terms of days of forward cover, OECD commercial stocks rose by 0.7 days, m-o-m, to stand at 62.8 days, indicating a stable supply situation relative to demand.

Supply-Demand Balance & Market Outlook

The demand for DoC crude in 2026 remains at 43.0 mb/d, which is about 0.6 mb/d higher than that of 2025. The demand for DoC crude in 2027 also remains at 43.6 mb/d, reflecting continued growth.

The analysis indicates a supply-demand gap in 2026, with world demand at 106.5 mb/d and non-DoC supply at 63.5 mb/d, resulting in a DoC requirement of 43.0 mb/d. This gap highlights the need for strategic production decisions to ensure market stability and balance.